Company Number 05385506
Incorporated in England & Wales
PANTHEON RESOURCES PLC
ANNUAL REPORT AND FINANCIAL STATEMENTS
YEAR ENDED 30 JUNE 2020
PANTHEON RESOURCES PLC
CONTENTS
Directors secretary, and advisers
Chairman’s statement
Chief Executive Officer’s statement and operational review
Section 172 statement
Finance Director’s report
Strategic report
Directors’ report
Directors’ biographies
Independent auditor’s report
Consolidated Statement of Comprehensive Income
Consolidated and Company Statements of Changes in Equity
Consolidated Statement of Financial Position
Company Statement of Financial Position
Consolidated Statement of Cash Flows
Company Statement of Cash Flows
Notes to the Financial Statements
Glossary
Page
3
4
5
7
9
11
14
23
24
32
33
36
37
38
39
40
67
PANTHEON RESOURCES PLC
DIRECTORS, SECRETARY AND ADVISERS
Directors
John (“Jay”) Cheatham (Chief Executive Officer)
Justin Hondris (Executive Director, Finance and Corporate Development)
Phillip Gobe (Non-Executive Chairman)
Robert (Bob) Rosenthal (Technical Director)
Jeremy Brest (Non-Executive Director)
Company Secretary
Ben Harber
Registered Office
Shakespeare Martineau
6th Floor
60 Gracechurch Street
London EC3V 0HR
Company Number
05385506
Auditors
Solicitors
Registrars
Principal Bankers
UHY Hacker Young
Quadrant House
4 Thomas More Square
London E1W 1YW
Bryan Cave Leighton Paisner LLP
Governors House
5 Laurence Pountney Hill
London EC4R 3AF
Computershare Investor Services plc
PO Box 82
The Pavilions
Bridgwater Road
Bristol BS99 7NH
Barclays Bank plc
Level 27, 1 Churchill Place
London E14 5HP
Nominated Adviser
& Broker
Canaccord Genuity Limited
88 Wood Street London, UK EC2V 7QR
Communications
& Public Relations
Blytheweigh Communications Ltd
4-5 Castle Court London
EC3V 9DL
PANTHEON RESOURCES PLC
CHAIRMAN’S STATEMENT
FOR THE YEAR ENDED 30 JUNE 2020
The global petroleum industry has been heavily impacted by the COVID-19 pandemic over the past 12 months.
Reduced demand for oil, coupled with factional disputes within OPEC, resulted in a severe drop in crude oil and
distillate prices globally. The entire industry, including explorers, producers and service providers, suffered
heavily, with project impairments and reduced appetite for new business resulting in vastly lower profits,
significant redundancies, and curtailment of capital expenditures, and suffering material impairments to projects,
the likes of which we have not seen for many years. Scores of E&P companies in the US and internationally have
filed for bankruptcy protection and there have been a number of recent consolidations; Chevron/Noble,
Devon/WPX, Conoco/Concho and Pioneer/Parsley. I’m sure more will come.
COVID-19 and the associated fallout also impacted our farm out process for a number of reasons:
• Given all potential farminees were already exposed to the oil sector, the severe fall in the oil price and
global economic uncertainty caused many companies to assess how their own Company was impacted,
resulting in many companies deferring capital investment/new project decisions for an indefinite period.
Travel bans and enforced quarantine periods meant that our physical data room was no longer a viable
option. We worked hard to transform it into a virtual data room but this was not nearly as effective as the
one on one interaction achieved when technical teams are together in a physical data room.
• The severity of the oil price falls resulted in catastrophic share price falls for many companies. To ensure
survival, many companies were forced to divest of projects as a source of financing, resulting in a
dramatic rise in the number of competing projects for sale/farmout.
• Affordability – companies simply didn't have the budget or the ability to raise new finance in order to
fund acquisitions/farmins.
Despite these challenges, Pantheon reacted swiftly and decisively to the changed landscape of the industry. We
reduced staff and cut salaries from top to bottom. We appointed a larger, resource focused international broker
and NOMAD and implemented a number of other initiatives. Notwithstanding these forces, and their very real
impact on our company, Pantheon found itself in a situation where its understanding and belief in the
prospectivity of our Alaskan projects was growing significantly. At a time when potential farm in companies
could afford to pay less, Pantheon’s value assessment of our projects was rising. Pantheon was determined to drill
the Talitha A well in early 2021, and ultimately decided to equity fund the well itself, raising $30.2m (before
costs) in late November at only 12% equity dilution; a far lower dilution than would have been achieved in a
farmout. See note 27 in the Notes to the Financial Statements for more details of the equity fund raising.
In what was an extremely challenging year for the sector, I am proud that Pantheon was one of the best
performing oil stocks on AIM in 2020, finishing the calendar year with a share price some 265% higher. And
only last week we successfully executed the final step in our leasehold strategy, acquiring 66,000 acres
contiguous to our Theta West and Talitha projects. This time last year we had a large lease position with
tremendous potential, but with leases that were aging. Today, we have over 160,000 acres of contiguous leases,
with even more potential, mostly covered by the recently awarded units at Alkaid and Talitha, or by leases with
remaining terms of 9 to 10 years.
With all of our Alaskan leases on State land, I am very pleased to report that Pantheon is unaffected by President
Biden’s decision, on his first day of presidency, to impose a 60-day moratorium on all oil and gas related leasing
and permitting actions on federal land.
It has been a year of great accomplishment for Pantheon.
Phillip Gobe
Chairman
26 January 2021
4
PANTHEON RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S STATEMENT AND OPERATIONAL REVIEW
FOR THE YEAR ENDED 30 JUNE 2020
As our Chairman Phillip stated, it has been a year of accomplishment for Pantheon. During the year under review
and beyond we have achieved a number of significant milestones as detailed below:
Receipt of Independent Experts Report at the Greater Alkaid Project
In January, 2020, Lee Keeling & Assoc. (“LKA") completed an Independent Expert Report and ascribed a
Contingent Resource of 76.5 million barrels of oil (“MMBO”) to our project, with a modelled NPV 10 of $595
million at that time (based upon a realized oil price of $55/barrel). The modelling estimates that peak production
reaches 30,000 BOPD and the average EUR (Economic Ultimate Recovery) per well was estimated to be 2.25
MMBO.
Receipt of Independent Experts Report at the Talitha Project
Subsequent to year end, in September 2020, LKA completed an Independent Experts Report on the Talitha Shelf
Margin Deltaic (“SMD”). Importantly, the SMD is only one of four targeted zones the Talitha #A well will
penetrate. LKA ascribed a Prospective Resource of 304 MMBO to the up-dip portion only of the SMD,
estimating an NPV 10 of $2.7 billion using the oil price curve current at that time. Peak average production was
modelled at 85,000 BOPD and the average well EUR was estimated to be 3.32 MMBO.
Awarding of Units at Alkaid and Talitha
After working with the State of Alaska for several months, our unit applications on Alkaid (22,804 acres) and
Talitha (44,373 acres) were deemed completed and were subsequently awarded in November 2020. The award of
these units is a major milestone for us, providing tenure over the leases (subject to us as adhering to certain
commitments as previously outlined in our RNS’s at the time). This was a collaborative process with the State
Department of Natural Resources who have their own geologists, geophysicists, engineers and evaluators to
ensure the unit has the technical and economic merit to reach production, so awarding a unit is affirmation of our
own technical and engineering work.
Spudding of the Talitha #A well
The recently spudded Talitha #A well is designed to intersect four targeted horizons; (i) the SMD, which is the
primary target, and the three secondary targets: (ii) the Slope Fan System; (iii) the Basin Floor Fan and (iv)
Kuparuk formations. All four of these reservoir intervals are independent and each is a huge target which
management believe have the potential to contain several hundred million barrels of recoverable oil.
Management believe that as a whole, the well is potentially targeting in the region of 1 billion barrels of gross
prospective oil resource across those multiple stacked objectives. Whilst a formal third party resource assessment
has only been provided on the SMD to date, Pantheon would anticipate updating this and commissioning further
formal resource estimates across the other horizons where appropriate after drilling of the well. The stratigraphic
trap that contains the SMD and Slope Fan system has a 2,000 foot oil column in the nearby Pipeline State #1
analogue well. Much of our work on Talitha is keyed off that well which was drilled in 1988 when drilling,
completion, and imaging technologies were not as advanced as modern day practices.
We prioritized the location of Talitha #A to intersect our the primary SMD objective in the optimum location,
structurally higher (updip) from the discovery well at Pipeline State #1. In optimizing the location of the well for
the primary target, the corollary is that the well is not optimally positioned for the secondary zones, all of which
are independent of one another. Nevertheless, the location should still enable assessment of the 3 secondary
zones, if warranted.
Acquisition of 10.8% working interest (“WI”) in Talitha, bringing Pantheon’s WI to 100%
In January 2021 Pantheon announced that it had reached agreement with Otto Energy Alaska LLC to acquire
100% ownership of Borealis Alaska LLC. Borealis owns a 10.8% working interest (“WI”) in all 16 leases in the
5
PANTHEON RESOURCES PLC
CHIEF EXECUTIVE OFFICER’S STATEMENT AND OPERATIONAL REVIEW
FOR THE YEAR ENDED 30 JUNE 2020
44,463 acre Talitha Unit. Upon completion of the acquisition Pantheon will increase its WI from 89.2% to 100%,
and will have a net revenue interest of 86% in the Talitha unit, for a consideration of 14,272,592 fully paid shares
in Pantheon, which will be subject to lock up from sale until 30 June 2021. The transfer of ownership is
conditional upon approval by the Alaska Department of Natural Resources.
Successful acquisition of approximately 66,000 acres with a 10-year term
In January 2021 Pantheon was successful in acquiring approximately 66,000 acres adjoining the Talitha and
Theta West projects in the State of Alaska's North Slope Area Wide Lease Sale. The new leases are strategically
positioned in two areas contiguous to our current acreage. Pantheon’s acreage now totals approximately 160,000
contiguous acres. The leases have a 10-year term with royalties ranging from 12.5% to 16.7%. Pantheon has
proprietary 3D Seismic over all the acreage acquired and had undertaken detailed analysis of the acreage position.
Management believe the acquisition of this acreage adds material value to the Group and expect to provide an
estimate of resource potential later in the year.
Successful completion of fundraisings
In July 2019 the Company raised $10.7m before costs at an issue price of £0.18/share, and subsequent to year
end, in November 2020, the Company raised $30.2m before costs at a price of £0.31/share.
Other
Over the past 2 years East Texas has taken a back seat to Alaska given the materially larger size, scale and
potential. We simply don’t have the resources to pursue both projects and Alaska is our priority. When natural gas
price net backs fell below $1.50/MMBTU earlier last year, we decided to shut in the East Texas wells and laid off
our production foreman and support staff. The severity of the COVID-induced downturn in the oil and gas sector
forced Pantheon, like many companies globally, to make some difficult decisions. Subsequent to the year end, in
late 2020, Pantheon announced its intention to exit its East Texas portfolio to concentrate solely on Alaska, where
the size and quality of the opportunity warrants our undivided attention. Accordingly, we have impaired the
remainder of our carrying value for our East Texas properties.
Summary
Even despite the impacts that COVID had on us and on the industry, it has been a great year for Pantheon. Two
Independent Expert Reports on the Alkaid and Talitha projects, the award by the State of Alaska of two Units
over Alkaid and Talitha, and we raised approximately $30 million allowing us to contract the Nordic Calista #3
rig to drill Talitha #A which spudded recently, approximately two weeks ahead of schedule, and we successfully
increased our working interest ownership of the Talitha Unit to 100%. I am particularly proud of our
achievements in land/lease management since the end of last year. We now have 160,000 contiguous acres,
offering greater potential than ever before, but crucially all on very young leases, or even better, on units.
I’m confident we have a world class opportunity at our Talitha project. Nothing is certain in oil and gas, but in my
50+ year career in the sector I can assure shareholders that the quality of the work and analysis has been as good
as anything I have seen. We have built a fantastic team at Pantheon and the size and scale of the opportunity set
within our portfolio is truly impressive. The progress we have made since acquiring Great Bear Petroleum two
years ago has been beyond what we expected and I am grateful for the incredible work of our small but talented
team. Over 10 years and over $200m has been invested into developing our Alaskan portfolio so it is with great
excitement that we observe the Talitha well over the coming months.
Jay Cheatham
Chief Executive Officer
26 January 2021
6
PANTHEON RESOURCES PLC
SECTION 172 STATEMENT
FOR THE YEAR ENDED 30 JUNE 2020
Section 172 of the Companies Act 2006 requires Directors to take into consideration the interests of stakeholders
and other matters in their decision making. The Directors continue to have regard to the interests of the
Company’s employees and other stakeholders, the impact of its activities on the community, the environment and
the Company’s reputation for good business conduct, when making decisions. In this context, acting in good faith
and fairly, the Directors consider what is most likely to promote the success of the Company for its members in
the long term. We explain in this annual report how the Board engages with stakeholders.
• The Directors are fully aware of their responsibilities to promote the success of the Company in
accordance with section 172 of the Companies Act 2006. Furthermore, the Directors have had refresher
training with their NOMAD of Director responsibilities in the application of AIM rules. This process
encourages the Board to reflect on how the Company engages with its stakeholders and to identify
opportunities for enhancement in the future and was considered at the Company’s board meetings. As
required, the Company’s external lawyers and the Company Secretary can provide support to the Board
to help ensure that sufficient consideration is given to issues relating to the matters set out in s172(1)(a)-
(f).
• As part of its ongoing business, the Board regularly considers the Company’s principal stakeholders and
how it engages with them. This is achieved through information provided by management via Regulatory
News Service announcements, Corporate Presentations, and Shareholder Meetings and teleconferences
and also by direct engagement with stakeholders themselves.
• The Company aims to work responsibly with key identified stakeholders; shareholders, employees,
consultants, suppliers, advisors, government bodies and local communities where exploration and
production activities take place.
• Key Board decisions made in the year are set out below:
Significant
events/decisions
Key s172
Stakeholders
Advancement of
geological
understanding of the
Alaskan assets
Shareholders,
Employees and
Business
Relationships
High Grading of
Alaskan lease acreage
Shareholders, State
of Alaska,
Business
Relationships
Actions and Consequences affected
• The Board implemented an in-depth geological review of
its Alaska North Slope assets.
• The consequences of this decision were to significantly
increase the resource potential of the projects. Pantheon
received an independent Experts report on its Greater
Alkaid asset certifying a Contingent Resource of 76.5
million barrels of oil (recoverable). Subsequent to year
end Pantheon received an Independent Experts Report on
the Shelf Margin Deltaic horizon of its Talitha project
which certified a Prospective Resource of 304 million
barrels of oil (recoverable).
• The Group successfully acquired new lease acreages
covering the Leonis & Theta West projects, and
additionally voluntarily relinquished to the State of Alaska
acreages which were considered non-core.
• The consequence of this decision was to high grade the
Group’s portfolio to key areas of focus, while at the same
time voluntarily relinquishing non-core acreages to the
State to allow them to potentially offer them for lease to
the wider public which would benefit the state.
7
PANTHEON RESOURCES PLC
SECTION 172 STATEMENT
FOR THE YEAR ENDED 30 JUNE 2020
Implementation of
staff share option
plan
Employees, long
term consultants
Implementation of
20% salary
reductions and other
cost cutting initiatives
Shareholders,
Employees
Increased interaction
with key stakeholders
Shareholders,
Employees, State
of Alaska, Other
Business
Relationships
• Subsequent to year end the Group successfully acquired
66,000 acres contiguous to its Talitha and Theta West
projects.
Implementation of staff share option plan
•
• The consequence of this decision was to deliver a share
option plan to allow staff to benefit from share price
outperformance, aligning staff interests with that of
shareholders, and to help management retain and attract
the highest quality personnel.
• The Board implemented salary reductions for directors
and employees for a 7 month period in response to
economic uncertainties caused by COVID 19 and the oil
price falls.
• The consequence of this decision was to preserve capital
for the benefit of all stakeholders
• The Board conducted a number of shareholder
presentations outside of the traditional AGM, which all
shareholders were invited to attend. More recently the
Company has held 2 webinars, which all shareholders,
interested parties and other stakeholders were invited to
attend, in addition to a number of video interviews. The
Group also held a number of technical presentations with
the State of Alaska, working with them to ensure they are
fully appraised of the Group’s intended plans.
• The consequence of these actions was to create a greater
level of understanding of the Group’s projects and
intended activities and to strengthen relationships with
stakeholders.
Finally, to you, our shareholders, thank you for your trust, belief and support in what has been a year of great
achievement for our Company. Your continued support is appreciated by your board, our wider internal team and
our external advisory group.
This report was approved by the board on 26 January 2021 and signed on its behalf.
Jay Cheatham
Chief Executive Officer
8
PANTHEON RESOURCES PLC
FINANCE DIRECTOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2020
Financial Review
The Group made a total comprehensive loss for the financial year ended 30 June 2020 of $17.0m (2019: profit
$35.3m). All but $4.1m of this loss was attributable to the impairment charges and other costs related to the East
Texas assets of the Group. Subsequent to year end, in late 2020, the Group made a decision to exit its East Texas
portfolio entirely, reflecting the previously announced strategic decision of the Group to prioritise its Alaska
North Slope asset portfolio, given its significantly larger size, scale and resource potential. . The decision to fully
impair the carrying value of the East Texas properties at 30 June 2020 was driven by the severe falls in oil and
gas prices resulting from the economic impacts of the pandemic, which had devastating effects on the US oil and
gas sector. Whilst there has been some recovery in prices since June 30, they were not considered enough to
justify continued investment into East Texas as it was concluded that capital could be better applied towards
Alaska. Accordingly, the Group will not renew key leases in East Texas going forward. With respect to the 2019
comparatives, the accounting standards require that the assets and liabilities acquired in the acquisitions of the
Great Bear Companies and of Vision Resources LLC during the prior year be recorded at their fair value at the
acquisition date and measured against the consideration paid. To the extent that the fair value of the assets
acquired exceeded the purchase consideration paid, a ‘bargain purchase’ was brought to account, and conversely
where the fair value was less than the consideration paid then that amount was accounted for in the prior year as
goodwill. The total operating loss for the year, including all impairments, was $21.8m (2019: Loss $55.2.m
including all impairments but excluding the gain on bargain purchase).
Production, Revenue and Cost of Sales
The Group’s net total sales production for the financial year ended 30 June 2020 amounted to 57,420 (2019:
191,024) mcf of natural gas and 158 (2019: 2,317) bbl of oil. Average realisations for the year for natural gas and
oil were US$1.81 (2019: $2.58) per mcf and US$59.93 (2019: $62.54) per barrel respectively.
Revenues for the year ended 30 June 2020 were $85,312 (2019: $724,589). The year on year decrease reflects the
poor operational performance of the East Texas wells and the deterioration in commodity prices which resulted in
the wells being shut-in for extended periods.
Cost of sales for the year ended 30 June 2020 were $6,273 (2019: $737,208). The year on year decrease in costs
reflects the poor operational performance of the East Texas wells. “Production royalties” for the year ended 30
June 2020 was $24,580 (2019: $205,458). “Depletion of developed oil & gas assets” for the year ended 30 June
2020 was $27,800 (2019: $148,485).
Impairments
In accordance with International Financial Reporting Standard 6 ‘Exploration for and Evaluation of Mineral
Resources’ (IFRS 6), exploration and evaluation assets are reviewed for indicators of impairment. Should
indicators of impairment be identified an impairment test is performed.
The Group has reviewed these assets for indications of impairment. Where impairment indications have been
found we have performed impairment tests. Impairments losses have been measured, presented and disclosed in
accordance with IAS 36.
Reflecting the Group’s previously announced strategic decision to exit East Texas to concentrate solely on its
Alaska North Slope assets and in light of the material fall in oil and gas prices in 2020, the Company has fully
impaired the carrying value of its East Texas oil and gas interests. Accordingly, an impairment charge of $16.6m
(2019: $48.6m) has been taken against the Company’s East Texas assets.
Capital structure
The Company completed a placing during the year and issued 48,228,247 new fully paid ordinary shares during
the year with a nominal value of £0.01, raising gross proceeds of c. $10.7m before expenses at an issue price of
18 pence per share.
As at 30 June 2020 total shares in issue, both ordinary and non-voting, was 605,229,768 (2019: 557,001,521).
As at 30 June 2020 the Company had 9,607,843 warrants outstanding to acquire non-voting convertible shares
(2019: 9,607,843). The warrants have an exercise price of £0.30 per share, are convertible on a 1:1 basis into
ordinary fully paid shares and expire on 30 September 2024. They are all fully vested.
9
PANTHEON RESOURCES PLC
FINANCE DIRECTOR’S REPORT
FOR THE YEAR ENDED 30 JUNE 2020
As at 30 June 2020 the Company had 10,000,000 options outstanding to acquire ordinary shares (2019:
10,000,000) at an exercise price of £0.30 per share and expire on 30 September 2024. At year end all share
options were fully vested.
Going concern
The Directors are satisfied with the Group’s ability to operate as a going concern for the next 12 months, as
documented further in Note 1.4.
Taxation
The Group incurred a loss for the year and has recorded a taxation charge of $4.7m (2019: $18.7m). Accordingly,
the Directors have adjusted deferred tax liability by the same amount.
Risk assessment
The Group’s oil and gas activities are subject to a variety of risks, both financial and operational, including but
not limited to those outlined below. These and other risks have the potential to materially affect the financial
performance of the Group. For additional detail see section Key Operational Risks and Uncertainties in the
Strategic Report on page 11.
Liquidity and Interest Rate Risk
Liquidity risk remains elevated for many companies in the natural resources sector for a number of reasons
including but not limited to global macro-economic conditions, the volatility in commodity prices, recent political
and other influences, which have impacted energy prices and created economic uncertainty.
Oil & Gas Price Risk
Future oil and gas sales revenues are subject to the volatility of the underlying commodity prices throughout the
year. Over the past year the energy sector has been impacted by volatility in commodity prices, which may
continue to impact the Group going forward. The Group did not engage in any commodity price hedging activity
during the year.
Currency Risk
Almost all capital expenditure and operational revenues for the year were denominated in US dollars. The Group
keeps the majority of its cash resources denominated in US dollars to minimise volatility and foreign currency
risk. The Group did not engage in any foreign currency hedging activity during the year.
Financial Instruments
At this stage of the Group’s activities it has not been considered appropriate or necessary to enter into any
derivatives strategies or hedging. Once the Group’s production revenues increase substantially, such strategies
will be reviewed on a more regular basis.
Justin Hondris
Director
26 January 2021
10
PANTHEON RESOURCES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2020
Principal activity
The Company is registered in England and Wales, having been incorporated under the Companies Act with
registered number 05385506 as a public company limited by shares. The principal activity of the Group is the
investment in oil and gas exploration and development. The Group operates in the U.K. through its parent
undertaking and in the U.S.A. through subsidiary companies, details of which are set out in the Note 9 to these
accounts.
Review of the Business and Key Performance Indicators
2019/2020 KPI
Pursue farmout
opportunities for East
Texas assets
Measurement
Completion of farmout
process
Ensure business
adequately funded
Operational activity in
Alaska
Fund raise where
appropriate
Drilling / testing wells
Pursue farmout of
Alaskan assets
Completion and opening
of data room. Admission
of potentially interested
parties into data room
Ensuring continued
high-quality technical
consultant relationships
Establish and maintain
relationships with industry
experts and review
performance
2019/2020 Performance
The onset of COVID-19 and the dramatic collapse in global oil prices
in early 2020 resulted in a materially deteriorated macroeconomic
environment for oil and gas companies. Many USA oil companies
have filed for bankruptcy and many others have seen severe share
price falls, reducing the pool of potential farmin partners who had the
capacity to farm into oil and gas projects generally. With the fall in oil
and gas prices Pantheon’s East Texas assets are not forecast to be
profitable and Pantheon sees it as unlikely to attract a farm in partner.
Therefore, Pantheon has fully impaired the carrying value of these
assets and does not intend to commit further funds to the project
following a decision post year end to exit East Texas in due course to
focus on the superior opportunity in Alaska.
Successful fund raisings announced in July 2019 and subsequent to
year end in November 2020.
The Alkaid Well successfully flow tested in 2019, resulting in a
Contingent Recoverable Resource of 76.5MMBO by an independent
expert. Additionally, an Independent Expert Report was received post
year end, covering the Shelf Margin Deltaic horizon of the Talitha
project, which estimated a Prospective Resource (recoverable) of 302
million barrels of oil. Pantheon intends to drill the Talitha #A well in
Q1 2021.
Following the deterioration in the oil price and other difficulties
associated with COVID19, farmout discussions became protracted in
2020. At the same time, Pantheon’s understanding of the geological
potential (and therefore potential value) of the assets increased
materially. Post year end, in November 2020 Pantheon raised $30.2m
in equity funding at a dilution of less than 13% to drill Talitha A on its
own, on far less dilutive terms than those being mooted by potential
farminees.
Pantheon’s technical team has been further strengthened in the year
under review. Experts such as eSeis and others remain contracted.
Financial Position and Future Prospects
Please refer to the Director’s Report for additional information on strategy and the business model.
Key operational risks and uncertainties
The Group may be unable to meet its lease obligations
In general, the Group's properties are held under oil and gas leases. The terms of the Group's leases often provide
for yearly rental payments. Such yearly rentals may vary depending upon the particular lease and whether the
Group has commenced activities in the property. If the Group defaults on its lease payments, its leases may be
automatically terminated. If the Group is unable to make these payments and its leases are terminated, there could
be a material adverse effect on its business, financial condition and results of operations. Managing the lease
position is of material importance for the Group, and management devote considerable time to lease management,
11
PANTHEON RESOURCES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2020
budgeting and planning, consulting with the State of Alaska where required. In 2020 Pantheon was awarded Units
on the Alkaid and Talitha projects and has been an active participant in the annual lease sales over the past 2
years, significantly strengthening Pantheon’s lease portfolio. The 66,000 leases acquired in the January 2021 have
a 10-year life, $10 per acre rentals and low royalties of between 12.5% - 16.7%.
The Group may be unable to renew and/or extend its leases once they expire
The Group's lease agreements contain terms whereby the lease may be terminated if the Group does not fulfil
certain obligations. These obligations include conducting exploration and/or production activities. If the Group is
unable to satisfy these conditions on a timely basis, it may lose its rights in these properties. In addition, given
that it may not be able to renew certain leases unless it begins exploration or production activities within specific
timeframes, the Group may be required to invest significant funds at timetables not optimal to it in order to meet
the capital requirements required under the terms of the leases. If the Group is unable to meet its obligations
under the terms of its leases, there could be a material adverse effect on its business, financial condition and
results of operations. To mitigate this risk the Group has successfully applied for and been granted unitization for
the leases that comprise its Talitha and Alkaid discoveries. Unitization recognizes that the Group has established
to the State’s satisfaction that all or part of multiple potential hydrocarbon accumulations are included in the unit
areas and allows the leases to potentially be held beyond the initial lease term. Most of Pantheon’s lease position
in now covered by these units or leases of between 9 and 10 years of remaining life. Management has materially
reduced the risk of lease expiry.
Our operations require the Group to obtain licensing, planning permissions and other consents
The development of its current and future leases may be dependent on the receipt of planning permission from the
appropriate local authorities as well as other necessary consents such as environmental permits and regulatory
consents. Obtaining the necessary consents and approvals may be costly, and they may not be granted or may be
withdrawn or made subject to limitations and conditions. Certain permits and consents may also become
contentious in the future, which may lead to these not being granted or withdrawn. For instance, in 2015, Repsol
only received approval from the North Slope Borough (local government) for a portion of its requested drill sites
on the North Slope of Alaska. The failure to gain such permissions or gain such permissions on terms or at a cost
acceptable to the Group, may limit the Group in its ability to develop and extract value from its leases and could
have a material adverse effect on its business, results of operations, financial conditions and prospects. To
manage the risk, the Group employees experienced and qualified personnel who have successfully obtained
licenses and permits in the past, and who maintain working relationships with regulatory agencies.
Political conditions and government regulations could change and have a material effect on the Group's results
of operations
Although political conditions in the Northern Slope Borough, the State of Alaska, the State of Texas and the
United States federal government are generally stable, changes may occur in their political, fiscal and/or legal
systems, which might adversely affect the Group's operations. The Group's strategy has been formulated in the
light of the current regulatory environment and probable future changes to the regulatory regime.
Although the Group believes that its activities are currently carried out in accordance with all applicable rules and
regulations, no assurance can be given that new rules, laws and regulations will not be enacted or that existing or
future rules and regulations will not be applied in a manner which could serve to limit or curtail exploration or
development of the Group's business or have an otherwise negative impact on its activities. Amendments to
existing rules, laws and regulations governing the Group's operations and activities, or increases in or more
stringent enforcement, implementation or interpretation thereof, could have a material adverse impact on the
Group's business, results of operations and financial condition.
Future legal proceedings could adversely affect the Group's business, results of operations or financial condition
The Group may face legal proceedings that may result in the Group having to pay material damages and/or other
remedies. While the Group would assess the merits of each legal proceeding and defend the Group accordingly, it
may be required to incur significant expenses or devote significant resources to defend against such legal
proceedings. In addition, legal proceedings are also difficult to predict, which may force the Group to enter into
settlement arrangements even in the absence of any culpability from its part.
12
PANTHEON RESOURCES PLC
STRATEGIC REPORT
FOR THE YEAR ENDED 30 JUNE 2020
Furthermore, the adverse publicity surrounding legal proceedings may negatively affect the Group's relation with
local communities, government and non-government organizations, which could also impact the Group's
activities. As a result, legal proceedings could have a material adverse effect on the Group's business, financial
condition, results of operations and prospects. To manage this risk the Group consults legal counsel when it faces
potential legal proceedings. The board and management consult legal counsel when conducting activities or
entering into agreements that are viewed to have the potential to give rise to material legal proceedings.
Failure to manage relationships with local communities, environmental groups and non-government
organizations could adversely affect the Group's future growth potential
The activities of oil and gas companies often face scrutiny from the public and receive negative publicity.
Although the Group's operations are not located in or near large communities, the Group's ability to further
expand its operation may be hindered by communities that may regard oil and gas activities as detrimental to their
environmental, economic or social circumstances. Furthermore, oil and gas companies are also increasingly
facing scrutiny by environmental groups regarding the effect operations may have on the animal life in the region.
Negative reaction to its operations could have a material adverse impact on the cost, profitability, ability to
finance or even the viability of an operation. Such events could give rise to material reputational damage.
These disputes are not always predictable and may cause disruption to projects or operations. Failure to manage
relationships with local communities, environmental groups and non-government organisations may adversely
affect the Group's reputation, as well as its ability to commence production projects in certain locations, which
could in turn affect its long-term prospects and the Group's business, financial condition and results of operations.
The Group’s current leased acreage is not in the immediate vicinity of any local community. To manage this risk
the Group ensures it conducts operations in a legal and responsible manner and complies with rules and
regulations.
Any change to government regulation/administrative practices may have a negative impact on the Group's ability
to operate and its future profitability
The business of oil and gas exploration and development is subject to substantial regulation under federal, state,
local laws relating to the exploration for, and the development, upgrading, marketing, pricing, taxation, and
transportation of oil and gas and related products and other matters. Amendments to current laws and regulations
governing operations and activities of oil and gas exploration and development operations could have a material
adverse impact on the Group's business. In addition, there can be no assurance that tax laws, royalty regulations
and government incentive programs related to the Group's oil and gas properties and the oil and gas industry
generally, will not be changed in a manner which may adversely affect the Group's prospects and cause delays,
inability to explore and develop or abandonment of these interests.
Furthermore, permits, leases, licenses, and approvals are required from a variety of regulatory authorities at
various stages of exploration and development. There can be no assurance that the various government permits,
leases, licenses and approvals sought will be granted in respect of the Group's activities or, if granted, will not be
cancelled or will be renewed upon expiry. There is no assurance that such permits, leases, licenses, and approvals
will not contain terms and provisions which may adversely affect the Group's exploration and development
activities. If any of the forgoing were to occur, it could have a material adverse effect on the Group's business,
financial condition and results of operations. To manage the risk, the Group employs experienced personnel and
contractors who have successfully obtained licenses and permits in the past, and who maintain working
relationships with regulatory agencies and monitor changes that could impact the Group.
By order of the board.
Justin Hondris
Director
26 January 2021
13
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2020
The Directors present their report together with the audited accounts of Pantheon Resources plc (“Pantheon” or
the “Company”) and its subsidiary undertakings (together the “Group”) for the year ended 30 June 2020.
Results and dividends
The Group results for the period are set out on page 32. The Directors do not propose to recommend any
distribution by way of a dividend for the year ended 30 June 2020.
Streamlined Energy and Carbon Reporting (SECR)
The Regulation requires large companies that have consumed (in the UK), more than 40,000 kilowatt-hours
(kWh) of energy in the reporting period to include energy and carbon information. The Group’s energy
consumption is for the year is considerably less than 40,000 kilowatt-hours (kWh) of energy so is currently
exempt from this reporting requirement. The Group’s energy consumption during the year was due to two small
offices and a data room. No drilling was conducted in the year ended 30 June 2020.
Information to shareholders – website
The Group maintains its own website (www.pantheonresources.com) to facilitate provision of information to
external stakeholders and potential investors and to comply with Rule 26 of the AIM Rules for Companies.
Group structure and changes in share capital
Details of the Group structure and the Company’s share capital during the period are set out in Notes 9 and 18 to
these accounts.
Directors
The Directors who served at any time during the year were:
Name
Phillip Gobe
John Cheatham
Justin Hondris
Robert Rosenthal
Jeremy Brest
Role
Non-Executive Chairman
Chief Executive Officer
Director, Finance & Corporate
Development
Technical Director
Non-Executive Director
Directors’ interests
Note
Appointed 2 October 2019
The beneficial and non-beneficial interests in the Company’s shares of the Directors and their families were as
follows:
Name
Number of Ordinary shares of £0.01
30 June 2020
Phillip Gobe
John Cheatham
Justin Hondris*
Robert Rosenthal
Jeremy Brest
*Some of these ordinary shares are beneficially owned by the spouse of J Hondris.
230,881
2,939,142
1,378,233
647,622
See note 1 below
Note 1
At the year end, Mr Brest does not have a direct interest in Pantheon and has an indirect interest in the Company
as described below:
14
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2020
Mr Brest's interest results from the direct and indirect holding of Pantheon by Westman Management
Limited ("Westman"), of which Mr Brest is the sole director. Westman holds 327,869 ordinary shares of
Pantheon and holds approximately 5.3% interest in Ursa Major Holdings LLC ("UMH"). UMH has an indirect
interest in Pantheon through Great Bear Petroleum Operating LLC ("GBPO") as a result of the acquisition of the
Great Bear Companies by Pantheon announced on 21 December 2018. UMH holds an approximately 50%
interest in GBPO. GBPO has a beneficial interest in approximately 28 million ordinary shares. 26 million of these
ordinary shares are held by CHONS LLC on behalf of GBPO. GBPO also owns approximately 88 million non-
voting shares convertible into ordinary shares, 4.8 million warrants exercisable into convertible non-voting shares
in the Company with strike price of £0.30 per share, and options over approximately 49 million shares in the
Company presently owned by CHONS LLC, of which approximately 30.7 million are currently exercisable into
ordinary shares and 13.3 million are exercisable into convertible non-voting shares.
Mr Brest's interest in the shares held by GBPO is variable based on the distribution mechanisms established by
the limited liability company agreements of UMH and Great Bear Petroleum Holdings LLC ("GBPH", a parent
company of GBPO). This interest changes with fluctuations of exchange rates, the Company's share price, and
other factors.
Share options
The Directors held the following share options for Ordinary shares of £0.01, at the beginning and end of the year:
Director
John Cheatham
Justin Hondris
Total
These are 100% vested as at 30 June 2020
At 30 June
2019
4,385,000
3,865,000
8,250,000
Granted during
the year
-
-
At 30 June
2020
4,385,000
3,865,000
8,250,000
Exercise
price
£0.30
£0.30
Latest date of
exercise
30 Sept 2024
30 Sept 2024
Former Directors held the following share options for Ordinary shares of £0.01, at the beginning and end of the
year:
Director
J Walmsley
Total
These are 100% vested as at 30 June 2020
At 30 June
2019
1,000,000
1,000,000
Granted during
the year
At 30 June
2020
1,000,000
1,000,000
Exercise
price
£0.30
Latest date of
exercise
30 Sept 2024
-
Report on Directors’ remuneration and service contracts
The service contracts of all the Directors are subject to a six-month termination period.
Directors’ remuneration
Director
J Cheatham
J Hondris
J Brest
P Gobe
R Rosenthal
Total
Fees/basic
salary
(US$)
432,940
338,600
29,851
93,646
149,863
1,044,900
Director incentive scheme
Share-based
payments
(US$)
Pension
Contributions
(US$)
Health
Insurance
(US$)
-
-
-
-
-
-
-
16,172
-
-
-
16,172
-
5,135
-
-
-
5,135
2020 Total
2019 Total
(US$)
432,940
359,907
29,851
93,646
149,863
1,066,207
(US$)
496,820
387,399
-
62,132
31,592
977,943
In 2012 the Company implemented a short-term executive director incentive scheme (the “scheme”) developed in
conjunction with executive remuneration specialists at Deloitte LLP. Any incentive bonus resulting from the
scheme will be shared by executive Directors and will be calculated as 2.25% of the value of “net-booked
reserves” for a period (deducting any net-booked reserves recognized in earlier periods for this purpose). For the
purposes of the scheme, net-booked reserves will include 100% of proved reserves and 25% of probable reserves
15
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2020
booked to the Group, as determined by an independent third party, where relevant, in accordance with the
classification definitions as mandated by the Society of Petroleum Engineers.
The remuneration committee will determine the extent to which any annual bonus resulting from the scheme will
be settled in cash or share options with a discounted exercise price. The cash component will be at least one third
of the total and there is no obligation to pay any of the annual bonus by way of share options. In the event of a
sale of the Company or other change of control, the calculation will be undertaken by reference to the equity
value of the Company (less the value of net booked reserves recognized in earlier periods). The remuneration
committee believed that the scheme, together with the granting of share options provides an appropriate and
reasonable structure to reward and motivate the executive Directors for performance that is aligned to the interests
of shareholders and provides a balance of long term and short-term performance measurement. Any potential
benefit from the scheme is linked to the booking of net-booked reserves which is considered to be a key milestone
reflecting potential “value add” for the benefit of shareholders. The value of share options is directly linked to the
longer-term share price performance and is therefore also considered to be a suitable metric as a basis for
executive remuneration.
Given the Group’s executive team has grown and given the Group’s strategy has shifted from East Texas to
Alaska, the directors view that evaluating the current plan consistent with the new strategy is appropriate and
should take into account other members of management participating, in addition to executive directors. Any
review would include consultation with the remuneration experts at Deloitte LLP. No awards have been paid
from this scheme since inception in 2012.
In July 2019, the Board announced its intention to implement a Share Option Plan (“the Plan”) for the benefit of
all staff and permanent consultants. The Plan comprised two components: (i) an initial award of up to 13.7m share
options to management and all staff at an exercise price of £0.27p, a premium of 50% above the most recent
fundraising price in July 2019 and (ii) future annual grants of share options to all staff to be issued on or about the
time of publication of the Company’s Annual Report at the prevailing share price, in respect of the respective
financial year reported upon. In respect of this annual component, on 19 November 2020 Pantheon announced its
intention to award share options award representing c.2.25% of its ordinary share capital (voting and non-voting)
to directors and all staff under the Company's Share Option Plan at the Fundraising Price of £0.31. It is
anticipated that this award will occur subsequent to the publication of this Annual Report.
Subsequent events
Details of subsequent events can be found at Note 27
Substantial shareholders
The Company has been notified, in accordance with Chapter 5 of the FCA Disclosure and Transparency Rules, of
the under noted interests in its ordinary shares as at 21 January 2021:
Shareholder
Goldman Sachs Securities
Limited
Vidacos Nominees Limited
The Bank of New York (Nominees) Limited
Lynchwood Nominees Limited
(Nominees)
Ordinary Shares % of Share Capital
101,007,285
66,863,835
49,186,376
33,643,101
17.52
11.60
8.53
5.84
Political and charitable contributions
There were no political or charitable contributions during the year.
16
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2020
CORPORATE GOVERNANCE STATEMENT
The Company has adopted the Quoted Companies Alliance Corporate Governance Code 2018 (the “QCA Code”).
This statement sets out how the Company complies with the 10 principles of the QCA Code.
The Board recognises the principles of the QCA Corporate Governance Code, which focus on the medium to long
term value for shareholders without stifling the entrepreneurial spirit in which small to medium sized companies
such as Pantheon, have been created. The Company sets out below its annual update on its compliance with the
QCA Code.
The QCA Code outlines 10 core principles that should be applied. These are listed below together with a short
explanation of how the Company applies each of the principles. The Company has adopted a share dealing code
for the Board and employees of the Company.
PANTHEON RESOURCES QCA CORPORATE GOVERNANCE COMPLIANCE
STRATEGY & BUSINESS MODEL
Pantheon's strategy is to focus on hydrocarbon exploration and production, onshore USA, in a region of low
sovereign risk where our specialist expertise lies. We run a lean organisation that is focused on maximising the
potential returns to shareholders through carefully targeted exploration, appraisal and where relevant,
development in established and highly prospective areas underpinned by detailed geological analysis where
applicable. Where appropriate the Group will also undertake value accretive acquisitions or divestitures of assets,
following careful analysis and, as appropriate, shareholder engagement. The Group, as appropriate, uses a
combination of in-house expertise and external consultants to manage operations.
Pantheon seeks to keep corporate overhead costs to a minimum, whilst balancing the need to hire and retain the
best personnel and advisors, so as to maximise the potential returns to shareholders in the event of success. Given
the current scale of the Group, corporate and operating costs are monitored by management to ensure appropriate
levels of spending.
The Board of Directors meet on a regular basis to discuss the strategic direction and operational status of the
Group, and any significant deviation or change will be highlighted to the board promptly should this occur.
UNDERSTANDING AND MEETING SHAREHOLDER NEEDS AND EXPECTATIONS
Group progress on achieving its key targets are regularly communicated to investors through stock exchange
announcements which can be found under the ‘News and Media’ section of the Company website. The Company
retains the services of a corporate communications firm who actively engage with press, investors and analysts, as
well as a Corporate Broker, to ensure shareholders understand the Group’s operations and activities. The Group
will consider the use of commissioned research as a medium for shareholder education.
The Company also utilises professional advisors such as a Broker, NOMAD, Corporate Communications
specialists and Company Secretarial services to provide advice and recommendations on various shareholder
considerations where relevant. The Company hosts a weekly conference call with all directors, our
Nomad/broker, and when appropriate our corporate communications advisors. During the call any shareholder
considerations identified over the course of the week can be tabled and responded to accordingly.
The Company regards the Annual General Meeting as a good opportunity to communicate directly with
shareholders via detailed presentations and an open question and answer session. Additionally, the Company has
also commenced holding webinars as and when relevant, open to all shareholders, typically providing an investor
presentation and an opportunity for Q&A with management. The Company also undertakes investor roadshows as
and when appropriate, arranged through its Broker. Over the past year, the Company considers that it has
17
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2020
communicated with a significant portion of its shareholder base and has a clear understanding of shareholder
expectations. Contact details are provided on the Company’s website and within public documents should
shareholders wish to communicate with the Company.
TAKING INTO ACCOUNT WIDER STAKEHOLDER & SOCIAL RESPONSIBILITIES AND THEIR
IMPLICATIONS FOR LONG-TERM SUCCESS
The Directors recognise their responsibilities to stakeholders including the State of Alaska, North Slope Borough,
staff, partners, suppliers, vendors, and residents within the areas it operates. Given the current size of the
Company, stakeholders are easily able to communicate directly with executive management and staff members,
allowing the Board to act appropriately on such feedback. A description of how the Group considers key
stakeholders in its decision making is provided on page 8.
The Company is conscious of its impact on the geological, archeological, and biological resources in its operating
environment, and has implemented measures to ensure that each person working on our projects, including
company personnel, contractors and subcontractors, are informed of the environmental, social, and cultural
concerns that relate to that person’s job, so we can minimise any negative impacts.
Stakeholders can contact the Company via the website, contact our Alaska operating company directly, or can
contact the Company’s retained corporate communications advisers where required.
EMBEDDING EFFECTIVE RISK MANAGEMENT
The Board has weekly conference calls to discuss operations, identify key risks and other relevant matters. The
Company’s Nomad and, when relevant, the Company’s corporate communications advisers also attend the
weekly conference calls. Additionally, the Group also has a policy of structured weekly or fortnightly operational
and management conference calls to identify and discuss key business challenges and risk areas. The Board
believes that this regular programme of internal communications provides an effective opportunity for potential or
real-time risks to be identified, considered and where necessary addresses in a timely manner. Refer page 8 for
additional description of how the Group considers Stakeholder interests in decision making. The Group’s oil and
gas activities are subject to a variety of risks, both financial and operational, more information on risk can be
found on pages 11 to 13 of the Company’s 2020 Annual Report.
Given the Company’s current size, the Board considers that the Executive Management team, with oversight from
the Non-Executive Board of Directors and relevant advisers are sufficient to identify risks applicable to the
Company and its operations and implement an appropriate system of controls. Accepting that no systems of
control can provide absolute assurance against material misstatement or loss, the directors believe that the
established systems for internal control within the group are appropriate to the size and cost structure of the
business. An internal audit function is not considered necessary or practical due to the size of the Company and
the close day to day control exercised by the executive directors.
The audit committee meets at least twice per year where these internal and financial controls are reviewed as
required and assets are also assessed for impairment considerations.
MAINTAINING A BALANCED AND WELL-FUNCTIONING BOARD
The Directors acknowledge their responsibility for, and recognise the importance of implementing and
maintaining, high standards of corporate governance. The Board is responsible for establishing and maintaining
the system of internal controls. The effectiveness of the Group's system of internal control is reviewed annually
by the Audit Committee of the Board.
18
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2020
The Board
The Board currently comprises two non-executive Directors, one of whom is the Chairman, and three executive
Directors. This composition is considered to be an appropriate balance given the Group’s current size, however
the Board may look to appoint an additional independent director in due course if considered appropriate. The
Board is responsible to the shareholders for the proper management of the Group. It meets regularly to set and
monitor strategy, examine opportunities, identify and consider key risks, consider (and where appropriate
approve) capital expenditure projects and other significant financing matters and report to shareholders. The
Board delegates authority to the management for day-to-day business matters including: drilling, geological and
operational matters, purchasing procedures, financial authority limits, contract approval procedures and the hiring
of full time and temporary staff and consultants. Matters reserved for the Board are communicated in advance of
formal meetings. In addition to formal board meetings, the directors hold weekly conference calls, which the
Company’s NOMAD is invited to attend, in order to keep the board fully informed with operational matters and
potential issues. Biographical details of the directors can be found on the ‘About Pantheon’ section of the
company’s website.
The QCA Code does not offer a definition of independence with respect to directors, so in forming a view on the
independence of directors the Company has sought guidance by reference to the guidelines outlined in the FCA’s
UK Corporate Governance Code. In any event, the Board exercises discretion in making the determination of
director independence which is kept under review on an annual basis. The non-executive Chairman, Phillip Gobe,
is currently considered to be independent.
The board has a number of committees as explained below.
Audit Committee
The Audit Committee consists of Phillip Gobe as Chairman, Jay Cheatham and Jeremy Brest. This Committee
provides a forum through which the Group's finance functions and auditors report to the non-executive Directors.
Meetings may be attended, by invitation, by the Company’s Nomad, Company Secretary, other Directors and the
Company’s auditors.
The Audit Committee meets at least twice a year. Its terms of reference include the review of the Annual and
Interim Accounts, consideration of the Company and Group’s accounting policies, the review of internal control,
risk management and compliance procedures, and consideration of all issues surrounding publication of interim
and annual financial results and the annual audit. The Audit Committee will also interact with the auditors and
review their reports relating to accounts and internal control systems.
Remuneration Committee
The Remuneration and Nomination Committee consist of Phillip Gobe as Chairman, Jeremy Brest, Jay Cheatham
and Justin Hondris. The Committee meets as and when required. Its role is to determine the remuneration
arrangements and contracts of executive Directors and senior employees, and the appointment or re-appointment
of Directors. It also has the responsibility for reviewing the performance of the executive Directors and for
oversight of the Company's incentive schemes. No Director is involved in deciding their own remuneration.
Conflicts Committee
The Company has established a Conflicts Committee which consists of Phillip Gobe as Chairman, Jeremy Brest,
Justin Hondris and Jay Cheatham. The role of the Conflicts Committee is to assist the Board in monitoring actual
and potential conflicts of interest under the definitions of the Companies Act 2006. Under the Companies Act
2006 Directors are responsible for their individual disclosures of actual or potential conflict. To follow best
practice, the Conflicts Committee holds discussions where appropriate, with the Company’s UK lawyers.
19
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2020
Anti-Corruption & Bribery Committee
The Company has established an Anti-Corruption & Bribery Committee. This committee consists of Justin
Hondris as Chairman, Jeremy Brest, Jay Cheatham and Phillip Gobe. The purpose of the Anti-Corruption &
Bribery Committee is to ensure the Company’s compliance with the Bribery Act 2010.
HAVING APPROPRIATE EXPERIENCE, SKILLS AND CAPABILITIES ON THE BOARD
The Board of directors has a mix of experience, skills, both technical and commercial, and personal qualities that
seek to deliver the strategy of the Company. The Company will ensure that the directors have the necessary up-to-
date experience, skills and capabilities to deliver the Company strategy and targets. If the Company identifies an
area where additional skills are required, the Company will often contract an appropriately qualified third party to
advise as required. Each director is listed on the ‘About Pantheon’ section of the Company’s website and in the
annual report along with a clear description of their role and experience. The Company recognises that it
currently has a limited diversity, including a lack of gender balance, and this will be considered in future
recruitment decisions if the board decides that additional directors are required.
EVALUATING BOARD PERFORMANCE
Given the Company’s current size, the Board has not considered it necessary to undertake a formal assessment of
the board performance and effectiveness, however, any deficiencies in Board performance and effectiveness
would be identified on an ad hoc basis. The board contracts the executive remuneration specialist at Deloitte for
matters concerning management incentive schemes.
ETHICAL VALUES & BEHAVIOURS
The Company operates a corporate culture that is based on ethical values and behaviors and treats operational
stakeholders fairly and with respect. It will maintain a quality system appropriate to the standards required for a
Company of its size. The board communicates regularly with staff through meetings, team conference calls and
presentations, individual telephone calls and messages and advocates respectful and open dialogue with
employees, consultants and other stakeholders.
MAINTAINING GOVERNANCE STRUCTURES AND PROCESSES
Ultimate authority for all aspects of the Company’s activities resides with the Board, with the respective
responsibilities of the Chairman, the Executive Directors and the various committees arising as a result of
delegation by the Board. Given the constraints of a balancing a small, cost conscious Board with a desire to
maintain high standards of Corporate Governance, the Board has active, structured and regular internal
communication, including a standing weekly conference call between the entire board and its NOMAD where
significant matters are tabled and discussed. All of the executive directors have designated roles and areas of
responsibility and engage with the Company’s shareholders and stakeholders in accordance with relevant
regulatory guidelines. There are a number of matters reserved for the Board’s review and approval including,
Group strategy, approval of major capital expenditure projects, approval of the annual and interim results,
fundraising, dividend policy and Board structure. It monitors the exposure to key business and operational risks
and reviews the strategic direction of the group and its operations. The Board delegates day-to-day responsibility
for managing the business to the Executive Directors/senior management team. The Board considers its current
governance structures and processes as appropriate in the context of its current size, headcount and complexity.
The audit committee meets at least twice per year where internal and financial controls are reviewed as required
and assets are also assessed for impairment considerations.
20
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2020
COMMUNICATING WITH SHAREHOLDERS AND OTHER RELEVANT STAKEHOLDERS
Page 7 of this Annual Report provides a section 172 Statement which discusses how the Group considers the
interests of shareholders and other relevant stakeholders in its decision making.
Additionally, Under AIM Rule 26 the Company publishes historical annual reports, notices of meetings and other
publications, including regular operational newsflow, over a minimum of the five previous years which can be
found under the ‘Financial Reports’ and other sections of the Company website.
The Board is committed to maintaining good communication and having dialogue with private and institutional
shareholders, as well as analysts. In addition to the Annual General Meeting, the Company endeavors to arrange
shareholder presentations (in person or my Webinar), allowing shareholders to discuss issues and provide
feedback as appropriate. The Company also retains the services of a specialist corporate communications advisor
to assist in promoting awareness of the Company’s activities to its shareholders and wider audience.
The Board have not published an audit committee or remuneration committee report, which the Board considers
to be appropriate given the size and stage of development of the Company.
In regard to a general meeting of the Company, upon the conclusion of that meeting the results of the meeting are
released through a regulatory news service and a copy of the announcement is posted on the Company’s website.
In a situation such as where a significant proportion of votes cast against a resolution then, where relevant, an
explanation would be provided.
EU Market Abuse Regulations
The EU Market Abuse Regulation came into effect in the UK on 3 July 2016 and the company has implemented
relevant policies and procedures to ensure compliance with the requirements of the regime. The Company
administers compliance in-house, consulting with NOMAD and legal counsel regularly.
Statement of Directors’ responsibilities
The Directors are responsible for preparing the financial statements in accordance with applicable laws and
International Financial Reporting Standards (“IFRS”) as adopted by the European Union. Company Law requires
the Directors to prepare financial statements for each financial period which give a true and fair view of the state
of affairs of the Group and of the Company and of the profit or loss of the Group for that period. In preparing
those financial statements, the Directors are required to:
select suitable accounting policies and then apply them consistently;
a)
b) make judgements and estimates that are reasonable and prudent;
c)
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the
Group will continue in business; and
state whether applicable accounting standards have been followed, subject to any material departures
disclosed and explained in the financial statements.
d)
The Directors confirm that the financial statements comply with the above requirements.
The Directors are responsible for keeping adequate accounting records which disclose with reasonable accuracy
at any time the financial position of the Group and Company and to enable them to ensure that the financial
statements comply with the Companies Act 2006. The Directors are also responsible for safeguarding the assets
of the Group and hence for taking steps for the prevention and detection of fraud and other irregularities. The
Directors are responsible for the maintenance and integrity of the corporate and financial information included on
the Company’s website.
21
PANTHEON RESOURCES PLC
DIRECTORS’ REPORT
FOR THE YEAR ENDED 30 JUNE 2020
Statement of disclosure to the auditors
So far as the Directors are aware:
a)
b)
there is no relevant audit information of which the Company’s auditors are unaware; and
all the Directors have taken all the steps that they ought to have taken to make themselves aware of any
relevant audit information and to establish that the auditors are aware of that information.
Auditors
In accordance with Section 489 of the Companies Act 2006, a resolution proposing that UHY Hacker Young be
reappointed as auditors of the Company and that the Directors be authorised to determine their remuneration will
be put to the next Annual General Meeting.
By order of the board
Justin Hondris
Director
26 January 2021
22
PANTHEON RESOURCES PLC
DIRECTORS’ BIOGRAPHIES
FOR THE YEAR ENDED 30 JUNE 2020
Phillip Gobe, Non Executive Chairman
Phillip Gobe has over 40 years’ experience in the oil and gas business both in the U.S.A. and internationally.
Phillip has held senior positions in Energy Partners Ltd (President & COO), Nuevo Energy Co. (COO), Vastar
Resources (COO) and several senior positions with Atlantic Richfield Company, including a role as Operations
Manager of Prudhoe Bay in Alaska, the largest oilfield in the USA. Throughout his career Phillip has successfully
overseen several corporate exits at substantial premiums to pre-deal valuations. Phillip also has a background in
drilling, human resources and health & safety. He is currently a non-executive director of the S&P 500 company,
Pioneer Natural Resources and Scientific Drilling International Inc, the fifth largest provider of directional
drilling and measurement equipment and operational services. He is also Executive Chairman of ProPetro, a
Texas-based oil services group providing hydraulic fracturing and other services. Phillip acts as Chairman of
Pantheon’s Remuneration and Nominations Committee, Audit Committee, and Conflicts Committee.
Jay Cheatham, Chief Executive Officer
Jay Cheatham has more than 50 years' experience in all aspects of the petroleum business. He has extensive
international experience in both oil and natural gas, primarily for ARCO. At ARCO, Jay held a series of senior
appointments. These include Senior Vice President and District Manager (ARCO eastern District) with direct
responsibility for Gulf Coast US operations and exploration and President of ARCO International where he had
responsibility for all exploration and production outside the U.S. Jay's most recent appointment was as President
and CEO of Rolls-Royce Power Ventures, where he had the key responsibility for restructuring the Company.
Jay also has considerable financial skills in addition to his corporate and operational expertise. He has acted as
Chief Financial Officer for ARCO's US oil and natural gas company (ARCO Oil & Gas). Moreover, he has
understanding of the capital markets through his past position as CEO to the Petrogen Fund, a private equity fund.
Justin Hondris, Director, Finance and Corporate Development
Justin Hondris has over 15 years’ experience in public company management in the upstream oil and gas sector
and has wide ranging experience in corporate finance, private equity and capital markets in the UK and abroad.
Prior to Pantheon, Justin was involved in the private equity sector where he gained valuable experience in both
investment and exit strategies for growth companies.
He is responsible for the financial, legal, administrative and corporate development functions of the company.
Robert (Bob) Rosenthal, Technical Director
Bob Rosenthal has over 40 years' experience in the oil and gas industry globally as an Exploration Geologist and
Geophysicist. He has held various senior exploration positions and spent a large part of his career at Exxon and at
BP, where he gained key relevant regional experience in the geology of North Slope of Alaska and of Texas.
Since 1999, Bob has run his own successful consulting business and has led the exportation efforts of a number of
private and public companies.
Jeremy Brest, Non-executive Director
Jeremy has more than 20 years’ experience in investment banking and financial advisory. Jeremy is the founder
of Framework Capital Solutions, a boutique Singapore-based advisory firm specialized in structuring and
execution of private transactions. Prior to founding Framework, Jeremy was the head of structuring for Indonesia
at Credit Suisse and a derivatives trader at Goldman Sachs.
23
PANTHEON RESOURCES PLC
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2020
Opinion
We have audited the financial statements of Pantheon Resources plc (the “Parent Company”) and its subsidiaries
(the “Group”) for the year ended 30 June 2020, which comprise the Consolidated Statement of Comprehensive
Income, the Consolidated and Company Statement of Changes in Equity, the Consolidated Statement of Financial
Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Company
Statement of Cash Flows and the related notes to the financial statements. The financial reporting framework that
has been applied in the preparation of the consolidated financial statements is applicable law and International
Financial Reporting Standards as adopted by the European Union (IFRSs).
In our opinion:
•
•
•
the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 30 June 2020 and of the Group’s loss for the year then ended;
financial statements have been properly prepared in accordance with IFRSs, as adopted by the European
Union;
the financial statements have been prepared in accordance with the requirements of the Companies Act
2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We are independent of the Company in accordance with the
ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s
Ethical Standard as applied to listed entities, and we have fulfilled our other ethical responsibilities in accordance
with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to
report to you where:
•
•
the directors' use of the going concern basis of accounting in the preparation of the financial statements is
not appropriate; or
the directors have not disclosed in the financial statements any identified material uncertainties that may
cast significant doubt about the company’s ability to continue to adopt the going concern basis of
accounting for a period of at least twelve months from the date when the financial statements are
authorised for issue.
24
PANTHEON RESOURCES PLC
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2020
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the financial statements of the current period and include the most significant assessed risks of material
misstatement (whether or not due to fraud) we identified, including those which had the greatest effect on: the
overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming
our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter
How the matter was addressed during the audit
and
Valuation
of
exploration and evaluation assets in
the Group
Impairment
The Group has capitalised costs in
respect of
the Group’s exploration
interests in accordance with IFRS 6
‘Exploration for and Evaluation of
Mineral Resources’ (IFRS 6). The
Directors need to assess the exploration
assets for indicators of impairment and
where they exist to undertake a full
the need
review
for
assess
to
impairment charges.
This involves
significant judgements and assumptions
such as the timing and extent and
probability of future cash flow.
We therefore identified the impairment
of exploration and evaluation assets as a
key audit matter, which was one of the
risks of
most significant assessed
material misstatement.
Our audit work included, but was not restricted to:
independent
reports available
• Discussing both the East Texas and Alaskan
exploration assets with the directors and evaluating
their impairment assessment in conjunction with
the
for each
exploration project and
reviewing available
information to assess whether the leases remain in
good standing.
In respect of the Alaskan exploration assets that
have not been impaired, we confirmed there is an
ongoing plan
to develop each prospect and
assessed the future plans of the projects in respect
of funding, the right to explore and development to
assess whether
indicators of
there were any
impairment in line with IFRS 6.
•
• We discussed the key leases with the directors and
considered their assessment in conjunction with the
independent reports on the portfolio of leases
available and reviewed other available information
to assess whether the leases remain in good
standing or are in the process of renewal.
Key observations
Indicators of impairment were identified this year. The
reduction in commodity prices and subsequent to the year
end a change in strategy to focus on the Alaskan assets
have lead to impairments of $7.8m being recognised in the
income statement.
to
the Alaskan exploration assets, no
With respect
indicators of impairment were identified in respect of the
carrying values of exploration and evaluation assets at the
year end.
25
PANTHEON RESOURCES PLC
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2020
Key audit matter
How the matter was addressed during the audit
Impairment of developed oil & gas
properties in the Group
Developed oil & gas assets in East
Texas were impaired down to their
disposal value in the current year. The
timing and value of the impairment
requires judgement and the directors are
required to consider the oil & gas
properties impairment in line with the
relative standards of IFRS 6 and IAS
36.
We therefore identified the impairment
of developed oil & gas properties as a
key audit matter, which was one of the
most significant assessed
risks of
material misstatement.
Impairment of investments and loans
due from subsidiary companies in the
Parent Company
International
Under
Accounting
Standard 36 ‘Impairment of Assets’,
to assess
companies are
whether there is any indication that an
asset may be impaired at each reporting
date.
required
assessment
Management
involves
significant judgements and assumptions
such as the timing and extent and
probability of future cash flow.
The Parent Company has loans due
from subsidiary companies of $139.7m
(2019:
investments
represent the primary balance on the
$135m). The
Our audit work included, but was not restricted to:
• Assessing whether the leased acreage in East Texas
was correctly pooled together in line with IAS 36.
• Discussing the East Texas assets with the directors
impairment assessment
available
their
conjunction with
and evaluating
conclusions
in
information.
• Evaluating the value in use of the developed oil &
gas properties in line with IAS 36.
• Assessing the future plans of the projects to ensure
impairments
consistent with
the
are
they
recognised in the year.
Key observations
Impairments of $6.9m in relation to the East Texas
developed oil & gas assets and $1.9m in respect of property
plant and equipment assets were processed in the year
owing to the reduced commodity prices and subsequently
following the group’s change of strategy to focus on the
Alaskan assets.
Our audit work included, but was not restricted to:
• Reviewing the investments balances for indicators
of impairment in accordance with IAS 36;
• Assessing the appropriateness of the methodology
applied by management in their assessment of the
loans by
recoverable amount of
comparing it to the Group’s accounting policy and
IAS 36;
intragroup
• Assessing management’s
evaluation of
the
recoverable amounts of intragroup loans including
review the impairment provisions and net asset
values of components that have intercompany debt;
loans have been
there are no
that
intragroup
that
reconciled and confirming
material differences.
• Checking
Key observations
The majority of the investment balances correlate with the
that subsidiary and our
exploration assets held by
26
PANTHEON RESOURCES PLC
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2020
Key audit matter
How the matter was addressed during the audit
Company balance sheet and there is a
risk it could be impaired and that
intragroup loans may not be recoverable
as a result of the subsidiary companies
incurring losses.
We therefore identified the impairment
of loans due from subsidiary companies
as a key audit matter in the Parent
Company financial statements, which
was one of the most significant assessed
risks of material misstatement.
Going concern
The Group’s ability
to maintain
sufficient working capital in order to
continue to meet its liabilities as they
fall due remains dependent upon the
existing cash reserves and the ability to
raise finance either through the issue of
debt and/or equity or farming out part of
their exploration assets.
therefore
We
concern as a key audit matter.
identified
the going
impairment review was therefore linked to our assessment
of
the corresponding
impairment on
indicators of
exploration licences.
As at the year end the carrying value of the Alaskan assets
held by the subsidiaries to which the funds had been lent
were in excess of the intercompany loans therefore no
indications of impairment were identified.
Our audit work included, but was not restricted to:
• Assessing the transparency, completeness and accuracy
of the matters covered in the going concern disclosure
by evaluating management's cash flow projections for
the next 12 months and the underlying assumptions.
• We obtained budgets and cash flow forecasts, reviewed
the methodology behind these, ensured arithmetically
correct and challenged the assumptions.
• We completed sensitivity analysis on the budgets
provided to assess the change in costs that would need
to occur to push the Group into a cash negative
position.
• We discussed plans for the Group going forward with
management, ensuring these had been incorporated into
the budgeting and would not have an impact on the
going concern status of the Group.
Key observations
The Group had cash reserves of $4.8m at the year-end and
has also raised an additional $30.2m in cash through an
equity placing in November 2020.
On discussion with management and review of the
projections we understand that based purely on committed
spend, then the Group will maintain a positive cash balance
throughout the next 12 months.
An additional $7.5m has been included for the Talitha Unit
well expenditure which is contingent on the Group having
27
PANTHEON RESOURCES PLC
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2020
Key audit matter
How the matter was addressed during the audit
sufficient cash or raising additional funds through further
equity financing. This additional spend will only be
incurred in a success case where the resource estimates are
proven. As this cost is not a commitment, this can be
delayed or avoided if there are insufficient funds available
to continue exploration.
The level of exploration is discretionary due to the
Pantheon Group having control over the operatorship over
its exploration interests in Alaska.
We are satisfied that the disclosures provided within the
financial statements are sufficient to provide the users with
a full understanding of basis of preparation in this regard.
Our application of materiality
The scope and focus of our audit was influenced by our assessment and application of materiality. We apply the
concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements on
our audit and on the financial statements.
We define financial statement materiality as the magnitude by which misstatements, including omissions, could
reasonably be expected to influence the economic decisions taken on the basis of the financial statements by
reasonably knowledgeable users.
We also determine a level of performance materiality which we use to determine the extent of testing needed to
reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality for the financial statements as a whole.
Materiality Measure Group
Overall materiality
We determined materiality for the financial statements to be:
Parent
How we determine it
$1,545,000 (2019: $1,670,000)
Based on the main key indicator,
being 1% of net assets of the
Group.
$1,082,000 (2019: $1,169,000)
1% of net assets of the Parent
Company
the Group
materiality amount therefore this was
capped at 70% of Group materiality.
exceeded
Rationale for
benchmarks applied
We believe the net assets are the most appropriate benchmark due to the
size and stage of development of the Company and Group and due to the
Group not yet generating any material revenue.
Performance
materiality
On the basis of our risk assessment, together with our assessment of the
Group and Company’s control environment, our judgement is that
performance materiality for the financial statements should be 75% of
materiality being:
$1,159,000 (2019: $1,252,500)
$812,000 (2019: $877,000)
28
PANTHEON RESOURCES PLC
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2020
Reporting threshold
We agreed with the Audit Committee that we would report to them all
misstatements over 5% of Group and company materiality identified during
the audit as set out below, as well as differences below that threshold that,
in our view, warrant reporting on qualitative grounds. We also report to the
Audit Committee on disclosure matters that we identified when assessing
the overall presentation of the financial statements.
$77,000 (2019: $83,500)
$54,000 (2019: $58,500)
An overview of the scope of our audit
As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the
financial statements. In particular, we looked at where the directors made subjective judgements and assumptions
in respect of the capitalisation or impairment of the costs attributable to the Group’s exploration and development
oil and gas assets and where there were future events that are inherently uncertain.
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the
financial statements as a whole, taking into account an understanding of the structure of the Company and the
Group, their activities, the accounting processes and controls, and the industry in which they operate. Our planned
audit testing was directed accordingly and was focused on areas where we assessed there to be the highest risk of
material misstatement.
Our Group audit scope includes all of the group companies. At the parent company level, we also tested the
consolidation procedures. The audit team communicated regularly throughout the audit with the Finance
personnel in order to ensure we had a good knowledge of the business of the Group. During the audit we
reassessed and re-evaluated audit risks and tailored our approach accordingly.
The audit testing included substantive testing on significant transactions, balances and disclosures, the extent of
which was based on various factors such as our overall assessment of the control environment, the effectiveness
of controls and the management of specific risk.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant findings, including any significant deficiencies in internal control that we
identify during the audit.
Other information
The directors are responsible for the other information. The other information comprises the information included
in the annual report, other than the financial statements and our auditors’ report thereon. Our opinion on the
financial statements does not cover the other information and, except to the extent otherwise explicitly stated in
our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
29
PANTHEON RESOURCES PLC
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2020
•
•
the information given in the strategic report and the directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors’ report have been prepared in accordance with applicable legal
requirements.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its environment obtained in the course of the
audit, we have not identified material misstatements in the strategic report or the directors’ report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
•
adequate accounting records have not been kept by the Company, or returns adequate for our audit
have not been received from branches not visited by us; or
•
the financial statements are not in agreement with the accounting records and returns; or
•
certain disclosures of directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of directors
As explained more fully in the statement of directors’ responsibilities, the directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the directors determine is necessary to enable the preparation of financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the company’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Company or to cease operations, or have no
realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or
error and are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial
Reporting Council’s website at www.frc.org.uk/auditorsresponsibilities.This description forms part of our
auditor’s report.
30
PANTHEON RESOURCES PLC
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF PANTHEON RESOURCES PLC
FOR THE YEAR ENDED 30 JUNE 2020
Use of our report
This report is made solely to the Company’s members, as a body, in accordance with part 3 of Chapter 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Company and the
Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Daniel Hutson (Senior Statutory Auditor)
For and on behalf of
UHY Hacker Young
Chartered Accountants
Statutory Auditor
Quadrant House
4 Thomas More Square
London E1W 1YW
26 January 2021
31
PANTHEON RESOURCES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Continuing operations
Revenue
Production royalties
Depletion of developed oil & gas assets
Cost of sales
Gross profit/(loss)
Administration expenses
General & Administrative expenses – Vision
Impairment of exploration & evaluation assets
Impairment of developed oil & gas assets
Impairment of property plant and equipment
Impairment of Goodwill
Bad Debt Expense
Depreciation of production & pipeline facilities
Operating loss
Gain on disposal of subsidiary undertaking
Gain on bargain purchase
Less: deferred tax thereon
Interest receivable
(Loss) / profit before taxation
Taxation
Notes
4
14.1
14.2
14.3
14.4
3
5
3
7
8
2020
$
85,312
(24,580)
(27,800)
(6,273)
26,659
(4,088,948)
(814,762)
(7,808,912)
(6,933,644)
(1,907,966)
-
(318,786)
-
(21,846,359)
109,417
-
-
25,880
2019
$
724,589
(205,458)
(148,485)
(737,208)
(366,562)
(3,438,239)
(1,744,730)
(34,138,156)
(13,092,684)
(1,397,950)
(796,236)
-
(275,665)
(55,250,222)
-
100,757,286
(28,783,396)
25,781
(21,711,062)
16,749,449
4,732,467
18,757,633
(Loss) / profit for the year
(16,978,595)
35,507,082
Other comprehensive income for the year
Exchange differences from translating foreign
operations
(47,800)
(179,284)
Total comprehensive (loss) / income for the year
(17,026,395)
35,327,798
(Loss) / profit per share
(Loss) / profit per ordinary share – basic and diluted
from continuing operations
2
(3.39)¢
10.54¢
The loss for the current and profit for the prior year and the total comprehensive loss for the current and profit for
the prior year are wholly attributable to the equity holders of the parent company, Pantheon Resources Plc.
32
PANTHEON RESOURCES PLC
CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Share
capital
Share
premium
Retained
losses
Currency
reserve
$
$
$
$
Share
based
payment
$
Non
controlling
Interests
$
Total
equity
$
Group
At 1 July 2019
7,966,075
164,044,720
(12,630,316)
(220,838)
2,163,898
(54,708)
161,268,831
Net (loss) for the year
Other comprehensive
income: Foreign
currency translation
Total comprehensive
income for the year
Capital Raising
Issue of shares
Issue of shares in lieu of
fees
Issue costs
Disposals
Balance at 30 June
2020
-
-
-
-
(16,978,595)
-
-
-
-
(47,799)
(16,978,595)
(47,799)
602,646
10,244,977
-
-
-
(31,239)
(571,366)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(16,978,595)
-
-
-
-
-
(47,799)
(17,026,394)
10,847,623
(31,239)
(571,366)
54,708
54,708
8,568,721
173,687,092
(29,608,911)
(268,637)
2,163,898
-
154,542,163
Share
capital
Share
premium
Retained
losses
Currency
reserve
$
$
$
$
Share
based
payment
$
Non
controlling
Interests
$
Total
equity
$
Group
At 1 July 2018
3,852,673
106,678,805
(48,137,398)
(41,554)
902,854
Net profit for the year
Other comprehensive
income: Foreign
currency translation
Total comprehensive
income for the year
Capital Raising
Issue of shares
Issue of shares in lieu of
fees
Issue costs
Acquisitions
Other
Shares issued in lieu of
fees
Business Combination
Business combination
Balance at 30 June
2019
-
-
-
-
-
-
35,507,082
-
-
(179,284)
35,507,082
(179,284)
1,394,037
19,865,021
23,753
-
(23,753)
(890,304)
1,947
30,218
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Issue of shares
2,693,665
38,384,733
-
-
-
-
-
-
-
-
-
63,255,380
35,507,082
(179,284)
35,327,798
21,259,058
-
(890,304)
42,339,442
32,165
(54,708)
(54,708)
-
-
-
-
-
-
1,261,044
-
-
7,966,075
164,044,720
(12,630,316)
(220,838)
2,163,898
(54,708)
161,268,831
33
PANTHEON RESOURCES PLC
CONSOLIDATED AND COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Share
capital
Share
premium
Retained
losses
Currency
reserve
$
$
$
$
Share
based
payment
$
Total
equity
$
7,966,075
164,044,720
(21,300,988)
(16,867,113)
2,163,898
136,006,592
-
-
-
-
-
-
(1,286,510)
-
-
(3,792,477)
(1,286,510)
(3,792,477)
602,646
10,244,977
-
-
(31,239)
(571,366)
-
-
-
-
-
-
-
-
-
-
-
-
(1,286,510)
(3,792,477)
(5,078,987)
10,847,623
(31,239)
(571,366)
8,568,721
173,687,092
(22,587,498)
(20,659,590)
2,163,898
141,172,623
Company
At 1 July 2019
Net (loss) for the year
Other comprehensive
income: Foreign
currency translation
Total comprehensive
income for the year
Capital Raising
Issue of shares
Issue of shares in lieu of
fees
Issue costs
Balance at 30 June
2020
34
PANTHEON RESOURCES PLC
COMPANY STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Share
capital
Share
premium
Retained
losses
Currency
reserve
$
$
$
$
Share
Based
payments
$
Total
equity
$
3,852,673
106,678,805
(19,837,455)
(13,241,579)
902,854
78,355,298
-
-
-
-
-
-
(1,463,533)
-
-
(3,625,534)
(1,463,533)
(3,625,534)
Company
At 1 July 2018
Net loss for the year
Other comprehensive
income: Foreign
currency translation
Total comprehensive
income for the year
Capital Raising
Issue of shares
Issue of shares in lieu of
fees
Issue Costs
Acquisitions
Other
Shares issued in lieu of
fees
Balance at 30 June
2019
Issue of shares
2,693,665
38,384,733
1,394,037
19,865,021
23,753
-
(23,753)
(890,304)
1,947
30,218
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(1,463,533)
(3,625,534)
(5,089,067)
21,259,058
-
(890,304)
1,261,044
42,339,442
-
32,165
7,966,075
164,044,720
(21,300,988)
(16,867,113)
2,163,898
136,006,592
35
PANTHEON RESOURCES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
Notes
2020
$
2019
$
ASSETS
Non-current assets
Exploration and evaluation assets
Developed oil & gas assets
Property, plant and equipment
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Provisions
Lease Liabilities
Deferred tax liability
Non-current liabilities
Lease Liabilities
Total liabilities
Net assets
EQUITY
Capital and reserves
Share capital
Share premium
Retained losses
Currency reserve
Share based payment reserve
Non controlling interests
15
17
17
10
11
12
13
16
8
16
18
24
3
156,097,609
-
658,898
156,756,507
160,887,260
6,961,445
2,494,464
170,343,169
74,167
4,802,965
4,877,132
1,843,649
1,853,986
3,697,635
161,633,639
174,040,804
388,092
1,335,863
46,311
5,293,296
7,063,562
27,914
27,914
1,410,347
1,335,863
-
10,025,763
12,771,973
-
-
7,091,476
12,771,973
154,542,163
161,268,831
8,568,721
173,687,092
(29,608,911)
(268,637)
2,163,898
-
7,966,075
164,044,720
(12,630,316)
(220,838)
2,163,898
(54,708)
Shareholders’ equity
The financial statements were approved by the Board of Directors and authorised for issue on the 26 January
2021 and signed on its behalf by
161,268,831
154,542,163
Justin Hondris
Director
Company Number 05385506
36
PANTHEON RESOURCES PLC
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2020
ASSETS
Non-current assets
Property, plant and equipment
Loans to subsidiaries
Current assets
Trade and other receivables
Cash and cash equivalents
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Lease Liability - Right of use assets
Non-current liabilities
Lease Liabilities
Total liabilities
Net assets
EQUITY
Capital and reserves
Share capital
Share premium
Retained losses
Currency reserve
Share based payment reserve
Shareholders’ equity
Notes
2020
$
2019
$
17
10
10
11
12
16
16
18
24
73,035
139,661,971
139,735,006
635
134,985,268
134,985,903
68,807
1,745,834
1,814,641
57,167
1,312,164
1,369,331
141,549,647
136,355,234
302,799
46,311
349,110
27,914
27,914
348,642
-
348,642
-
-
377,024
348,642
141,172,623
136,006,592
8,568,721
173,687,092
(22,587,498)
(20,659,590)
2,163,898
7,966,075
164,044,720
(21,300,988)
(16,867,113)
2,163,898
141,172,623
136,006,592
In accordance with the provisions of Section 408 of the Companies Act 2006, the Company has not presented an
income statement. A loss for the year ended 30 June 2020 of $1,286,510 (2019: loss of $1,463,533) has been
included in the consolidated income statement.
The financial statements were approved by the Board of Directors and authorised for issue on 26 January 2021
and signed on its behalf by:
Justin Hondris
Director
Company Number 05385506
37
PANTHEON RESOURCES PLC
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Notes
2020
$
2019
$
Net outflow from operating activities
19
(5,707,802)
(5,513,085)
Cash flows from investing activities
Interest received
Funds used for drilling, exploration and leases
Developed oil & gas assets
Decommissioning Provision (Exploration & Evaluation)
Decommissioning Provision (Developed Oil & Gas
Assets)
Property, plant & equipment
Acquisition of a subsidiary (Great Bear), net of cash
acquired
Acquisition of a subsidiary, (Vision Resources LLC) net
of cash acquired
Disposal
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from share issues
Issue costs paid in cash
Repayment of borrowing and leasing liabilities
Net cash inflow from financing activities
3
3
3
18
25,881
(1,591,591)
-
-
-
-
-
-
(1,134)
(1,566,844)
25,781
(10,579,750)
(523,934)
676,464
409,400
(312,637)
(6,098,215)
1,920
-
(16,400,971)
10,816,383
(571,364)
(21,394)
10,223,625
21,259,057
(890,304)
-
20,368,753
Increase / (decrease) in cash & cash equivalents
2,948,979
(1,545,304)
Cash and cash equivalents at the beginning of the year
Cash and cash equivalents at the end of the year
11
1,853,986
4,802,965
3,399,290
1,853,986
38
PANTHEON RESOURCES PLC
COMPANY STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2020
Notes
2020
$
2019
$
Net cash outflow from operating activities
19
(5,137,011)
(4,894,845)
Cash flows from investing activities
Interest received
Loans to subsidiary companies
Net cash outflow from investing activities
Cash flows from financing activities
Proceeds from share issues
Issue costs paid in cash
Lease payments – right of use assets
Net cash inflow from financing activities
23,759
(4,676,703)
(4,652,944)
25,674
(14,875,186)
(14,849,512)
18
10,816,383
(571,364)
(21,394)
10,223,625
21,259,057
(890,304)
-
20,368,753
Increase in cash and cash equivalents
433,670
624,396
Cash and cash equivalents at the beginning of the year
1,312,164
687,768
Cash and cash equivalents at the end of the year
11
1,745,834
1,312,164
39
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.
Accounting policies
A summary of the principal accounting policies, all of which have been applied consistently throughout the year,
is set out below.
1.1
Basis of preparation
The financial statements have been prepared on a going concern basis using the historical cost convention and in
accordance with the International Financial Reporting Standards (“IFRSs”), including IFRS 6, ‘Exploration for
and Evaluation of Mineral Resources’, as adopted by the European Union (“EU”) and in accordance with the
provisions of the Companies Act 2006.
The Group’s financial statements for the year ended 30 June 2020 were authorised for issue by the board of
Directors on 26 January 2021 and were signed on the Board’s behalf by Mr J Hondris.
The Group and Company financial statements are presented in US dollars.
1.2
Basis of consolidation
Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are de-
consolidated from the date that control ceases. The purchase method of accounting is used to account for the
acquisition of subsidiaries by the Group. The cost of an acquisition is measured as the fair value of the assets
given, equity instruments issued, and liabilities incurred or assumed at the date of exchange. Identifiable assets
acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their
fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of
acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill.
Goodwill arising on acquisitions is capitalised and subject to impairment review, both annually and when there
are indications that the carrying value may not be recoverable.
Inter-company transactions, balances and unrealised gains on transactions between group companies are eliminated.
All the companies over which the Company has control apply, where appropriate, the same accounting policies as
the Company.
1.3
Interests in joint arrangements
IFRS 11 defines a joint arrangement as an arrangement over which two or more parties have joint control. Joint
control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about
the relevant activities (being those that significantly affect the returns of the arrangement) require unanimous
consent of the parties sharing control.
Joint operations
A joint operation is a type of joint arrangement whereby the parties that have joint control of the arrangement
have rights to the assets and obligations for the liabilities, relating to the arrangement. In relation to its interests in
joint operations, the Group recognises its:
-
-
-
-
-
Assets, including its share of any assets held jointly
Liabilities, including its share of any liabilities incurred jointly
Revenue from the sale of its share of the output arising from the joint operation
Share of the revenue from the sale of the output by the joint operation
Expenses, including its share of any expenses incurred jointly
1.4
Going concern
The Directors have reviewed the Group’s overall position and outlook and are of the opinion that the Group is
able to operate as a going concern for at least the next twelve months from the date of approval of these financial
statements.
Subsequent to the year end, in November 2020, the Company raised c. $30.2m through an equity fundraising at a
price of £0.31 per share.
The 16 leases in the Talitha Unit (formally awarded to Pantheon in November, 2020) are subject to a contractual
work commitment as follows:
40
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1. posting a performance bond in the amount of $3.3 million no later than September 15, 2021, and
2. drill either
a. one well in the Unit by the second anniversary of the Unit effective date, or
b.
two wells in the Unit by the fifth anniversary of the effective date.
Upon completion of either well commitment, the performance bond will be returned (if a well is drilled prior to
September 15, 2021, the bond will not be required). Failure to meet the first (performance bond) requirement will
result in immediate termination of the Unit. Failure to meet the drilling commitment will result in termination of
the Unit after the fifth anniversary and forfeiture of any performance bond. If the proposed Talitha #A well is
drilled in Q1 2021 as planned, it will satisfy both aspects of the work commitment.
Subsequent to year end, in November 2020, the Company successfully raised $30.2m before costs through the
issuance of ordinary shares to subscribers. The Company estimates a maximum $24.5m cost to drill the Talitha
#A well in a success case, which would involve completing and testing all 4 independent zones. If successful, the
well has the potential to generate material value for shareholders and the Company believes that it would be able
to raise additional funding in such a situation. Funding options would include farmout (the Company believes
proving up the Talitha A well would generate significant interest in the asset and attractive economic terms for
Pantheon), equity or debt. Should preliminary well data not warrant completing and testing of any or all of the 4
independent targeted zones, then the well would be expected to cost less than $24.5m as approximately $7.5m of
the well cost was budgeted for completion and testing of the 4 targeted zones. The Group has no firm obligations
to drill any more wells or undertake more testing than it determines necessary; all drilling decisions are at the
Group’s discretion. Additionally, the Group was successful in acquiring 66,000 leases in January 2021. The
Group paid a non-refundable deposit of $0.65m for the leases with a balance of $2.6m due upon grant, estimated
in Q3 2021. Following the completion of operations at Talitha #A a decision will be made whether to farm out or
sell a working interest in the well, or to seek alternate finance such as debt or equity to fund future operations.
Given the discretionary nature of some of the commitments, the Directors believe that the Group is sufficiently
funded and believe the use of the going concern basis is appropriate. Accordingly, the Directors have prepared the
financial statements on a going concern basis.
1.5
Revenue
The Group is engaged in the business of extracting oil and gas. Revenue from contracts with customers is
recognised in accordance with IFRS15 at an amount that reflects the consideration to which the Group expects to
be entitled in exchange for those goods.
Contract balances
A contract asset is the right to consideration in exchange for goods transferred to the customer. If the Group
performs by transferring goods to a customer before the customer pays consideration or before payment is due, a
contract asset is recognised for the earned consideration that is conditional. The Group does not have any contract
assets as performance and a right to consideration occurs within a short period of time and all rights to
consideration are unconditional.
Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the
financial assets.
1.6
Foreign currency translation
(i)
Functional and presentational currency
The financial statements are presented in US Dollars (“$”), which is the functional currency of the
Company and is the Group’s presentation currency.
(ii)
Transactions and balances
Transactions in foreign currencies are translated into US dollars at the average exchange rate for the year.
Monetary assets and liabilities denominated in foreign currencies are translated at the rate of exchange
ruling at the balance sheet date. The resulting exchange gain or loss is dealt with in the income statement.
41
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
The assets, liabilities and the results of the foreign subsidiary undertakings are translated into US dollars at the rates
of exchange ruling at the year end. Exchange differences resulting from the retranslation of net investments in
subsidiary undertakings are treated as movements on reserves.
1.7
Cash and cash equivalents
The Company considers all highly liquid investments, with a maturity of 90 days or less to be cash equivalents,
carried at the lower of cost or market value.
1.8
Deferred taxation
Deferred tax is provided in full, using the liability method, on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the financial statements. Deferred tax is determined using
tax rates (and laws) that have been enacted or substantially enacted by the balance sheet date and expected to
apply when the related deferred tax is realised, or the deferred liability is settled.
Deferred tax assets are recognised to the extent that it is probable that the future taxable profit will be available
against which the temporary differences can be utilized.
1.9
Exploration and evaluation costs and developed oil and gas properties
The Group follows the ‘successful efforts’ method of accounting for exploration and evaluation costs. At the
point of production, all costs associated with oil, gas and mineral exploration and investments are classified into
and capitalised on a ‘cash generating unit’ (“CGU”) basis, in accordance with IAS 36. Costs incurred include
appropriate technical and administrative expenses but not general corporate overheads. If an exploration project is
successful, the related expenditures will be transferred to Developed Oil and Gas Properties and amortised over
the estimated life of the commercial reserves on a ‘unit of production’ basis.
The recoverability of all exploration and evaluation costs is dependent upon the discovery of economically
recoverable reserves, the ability of the Group to obtain necessary financing to complete the development of the
reserves and future profitable production or proceeds from the disposition thereof. All balance sheet carrying
values are reviewed for indicators of impairment at least twice yearly. The prospect acreage has been classified
into discrete “prospects” or CGU’s. When production commences the accumulated costs for the specific CGU is
transferred from intangible fixed assets to tangible fixed assets i.e., ‘Developed Oil & Gas Properties’ or
‘Production Facilities and Equipment’, as appropriate. Amounts recorded for these assets represent historical
costs and are not intended to reflect present or future values.
1.10
Impairment of exploration costs and developed oil and gas properties, depreciation of
assets, plug & abandonment and goodwill
In accordance with IFRS 6 ‘Exploration for and Evaluation of Mineral Resources’ (IFRS 6), exploration and
evaluation assets are reviewed for indicators of impairment. Should indicators of impairment be identified an
impairment test is performed.
In accordance with IAS 36, the Group is required to perform an “impairment test” on assets when an assessment
of specific facts and circumstances indicate there may be an indication of impairment, specifically to ensure that
the assets are carried at no more than their recoverable amount. Where an impairment test is required, any
impairment loss is measured, presented and disclosed in accordance with IAS 36.
In accordance with IAS 36 the Group has determined an accounting policy for allocating exploration and
evaluation assets to specific ‘cash-generating units’ (“CGU”) where applicable.
Exploration and evaluation costs
Consistent with Pantheon’s intention to exit its East Texas portfolio to focus solely on its Alaska North Slope
assets, the Group has fully impaired the carrying values of its East Texas projects. Given the material fall in oil
and gas prices in North America in 2020, the East Texas assets are forecast to be NPV negative. Accordingly, the
Directors believe it unlikely that they could be sold for a material sum and have fully impaired the carrying value
of the East Texas properties. The Alaskan exploration and evaluation leasehold assets were fair valued as at the
date of acquisition of Great Bear. The carrying value at 30 June 2020 represents the cost of acquisition plus the
fair value adjustment and subsequent capitalised costs, in accordance with IFRS.
42
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Decommissioning Charges
Decommissioning costs will be incurred by the Group at the end of the operating life of some of the Group’s
facilities and properties. The Group assesses its decommissioning provision at each reporting date. The ultimate
decommissioning costs are uncertain and cost estimates can vary in response to many factors, including changes
to relevant legal requirements, the emergence of new restoration techniques or experience at other production
sites. The expected timing, extent and amount of expenditure may also change — for example, in response to
changes in reserves or changes in laws and regulations or their interpretation. Therefore, significant estimates and
assumptions are made in determining the provision for decommissioning. As a result, there could be significant
adjustments to the provisions established which would affect future financial results. The provision at reporting
date represents management’s best estimate of the present value of the future decommissioning costs required.
For all wells the Group has adopted a Decommissioning Policy in which all decommissioning costs are
recognised when a well is either completed, abandoned, suspended or a decision taken that the well will likely be
plugged and abandoned in due course. For completed or suspended wells, the decommissioning charge is
provided for and subsequently depleted over the useful life of well using unit of production method.
Goodwill
Goodwill, when carried, is tested for impairment annually (as at 30 June) and when circumstances indicate that
the carrying value may be impaired. Impairment is determined for goodwill by assessing the recoverable amount
of the asset or group of assets to which the goodwill relates. Where the recoverable amount is less than its
carrying amount, an impairment loss is recognised. If an impairment is recognised it is reflected in the statement
of profit or loss and other comprehensive income as part of other operating expenses.
Developed Oil and Gas Properties
Developed Oil and Gas Properties only represent the capitalised costs associated with oil and gas properties,
assessed on a CGU (cash generating basis) which have been transferred from “Exploration and Evaluation costs”
to “Developed Oil & Gas properties” when the well was commissioned. Wells are depleted over the estimated life
of the commercial reserves based on the “Unit of production basis” based upon a typeset P50 well estimated at
1.4Mmboe P50 prospective resource (recoverable). The carrying values of Developed Oil and Gas properties are
tested for indicators of impairment, and the higher of the asset’s fair value less costs to sell and value in use, is
compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is
expensed to the income statement. During the year, all historical East Texas wells were impaired to zero,
reflecting their poor performance and the decision to exit the East Texas portfolio.
Other property, plant and equipment
Other property, plant and equipment are stated at historical cost less depreciation. Depreciation is provided at
rates calculated to write off the costs less estimated residual value of each asset over its estimated useful life as
follows:
-
-
Production facilities and equipment are depreciated by equal instalments over their expected useful lives,
ranging from 3 to 30 years. Pipeline and associated costs are depreciated over 30 years; tankage,
generators and generator systems over 20 years and equipment associated with the Gas Plant over 3
years.
Office equipment is depreciated by equal annual instalments over their expected useful lives, being three
years.
1.11
Financial instruments
IFRS 7 requires information to be disclosed about the impact of financial instruments on the Group's risk profile,
how the risks arising from financial instruments might affect the entity's performance, and how these risks are
being managed.
The Group's policies include that no trading in derivative financial instruments shall be undertaken. These
disclosures have been made in Note 23 to the accounts.
43
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
1.12 Leases
The Group has applied IFRS 16 using the modified retrospective approach and therefore comparative information
has not been restated and is presented under IAS 17. The details of accounting policies under both IAS 17 and
IFRS 16 are presented separately below.
Policy applicable from 1 July 2019
All contracts entered into by the group are assessed to determine if they are either a lease contract or contain a
lease contract. Where a lease is identified the Group recognises a right of use asset and a corresponding lease
liability with respect to all lease arrangements in which it is a lessee.
There are three key evaluations in determining a lease contract:
The contract contains an identified asset, which is either explicitly identified in the contract or implicitly
I.
specified by being identified at the time the asset is made available to the group.
The Group has the right to obtain substantially all of the economic benefits from use of the identified
II.
assets throughout the period of use, considering rights within the defined scope of the contract.
III.
The Group has the right to direct the use of the identified asset throughout the period of use.
Lease liabilities are initially measured at the discounted present value of all future lease payments, excluding
prepayments made up to and including the commencement date of the lease. The discount rate used is either the
rate implicit in the lease, or if that is not readily determined, the incremental borrowing rate.
The lease liability is presented as a separate line item in the balance sheet.
Subsequent measurement of the lease liability includes increases to the carrying amount of the liability to reflect
the interest on the lease liability (using the effective interest method) and by reducing the carrying amount for the
lease payments made.
The Group remeasures the lease liability (and makes a corresponding adjustment to the related right-of-use asset)
whenever:
There is a change in the lease term. In such cases the lease liability is remeasured by discounting the
A.
revised lease payments using the revised discount rate.
B.
Change of lease payments (due to changes in the reference index or rate) or any changes in expected
payments under a guaranteed residual value. In such instances the lease liability is remeasured using unchanged
discount rates; a revised discount rate is used where the lease payments are changed due to a change in a floating
interest rate.
Where a lease modification is not accounted for as a separate lease. In such a case the lease liability is
C.
remeasured bases on the modified lease term, using the revised discount rate at the date of the modification.
The initial carrying value of a right of use assets consists of:
•
•
•
•
The corresponding lease liability
All and any prepayments prior to the lease commencement.
Less: Any lease incentive received by the lessee
Less: Any initial direct costs incurred by the lessee.
Right-of-use assets are depreciated over the shorter period of lease term and useful life of the underlying asset.
The depreciation starts at the commencement date of the lease. The asset is subsequently measured at initial
carrying value less accumulated depreciation and impairment losses.
Where an impairment indictor has been identified, an impairment test is conducted. In assessing whether an
impairment is required, the carrying value of the asset is compared with its recoverable value. The recoverable
amount is the higher of the assets fair value less the costs to sell and value in use.
44
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Policy applicable prior to 1 July 2019
Leases where substantially all of risks and rewards of ownership where not transferred to the lessee where
classified as an “operating lease”. Payable amounts, under the lease terms, where charged to the profit and loss
account over the lease term.
1.13 Critical accounting estimates and judgements
The preparation of financial statements in conformity with International Financial Reporting Standards requires
the use of accounting estimates and assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of income and expenses during the reporting period.
Although these estimates are based on management’s best knowledge of current events and actions, actual results
ultimately may differ from those estimates. IFRSs also require management to exercise its judgement in the
process of applying the Group’s accounting policies.
The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are
significant to the financial statements are as follows:
Impairment of tangible and intangible assets
The first stage of the impairment process is the identification of an indication of impairment. Such indications can
include production difficulties, significant reductions in estimates of resources, significant falls in commodity
prices, a significant revision of Group Strategy or of the plan for the development of a field, operational issues
which may require significant capital expenditure to remediate and others. This list is not exhaustive and
management judgement is required to decide if an indicator of impairment exists. The Group regularly assesses the
tangible and non-tangible assets for indicators of impairment. When an impairment indicator exists an impairment
test is performed; the recoverable amount of the asset, being the higher of the asset’s fair value less costs to sell and
value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable
amount is expensed to the income statement.
Contingent liabilities
Pursuant to IAS37, A contingent liability is either: (1) a possible obligation arising from past events whose
existence will be confirmed only by the occurrence or non-occurrence of some uncertain future event not wholly
within the entity’s control, or (2) a present obligation that arises from a past event but is not recognized because
either: (i) it is not probable that an outflow of resources embodying economic benefits will be required to settle
the obligation, or (ii) the amount of the obligation cannot be measured with sufficient reliability.
A gas processing plant from Kinder Morgan was commissioned by Vision. Pantheon was not a signatory to the
gas processing agreement, is not named in the agreement, and explicitly declined to provide any financial support
in relation to the original agreement. Pantheon has taken legal advice on the matter and believes it has no liability
to the service provider. Accordingly, Pantheon do not consider a provision should be included with the final
statements and will contest any claim made.
Value of exploration assets on acquisition
In accordance with IFRS 3 Business Combinations, exploration assets acquired as part of a business acquisition,
and hence combination, are recorded at their fair value as opposed to the fair value of the consideration paid. For
more detail on the basis of the fair value calculation of the Great Bear Petroleum exploration assets in January
2019 refer to note 3.
Developed Oil & Gas Properties
Developed Oil & Gas Properties are amortised over the life of the area according to the unit of production
method. If the amount of economically recoverable reserves varies, this will impact on the amount of the asset
which should be carried on the balance sheet. The group categorises its leases (intangible assets) and its
Developed Oil and Gas Properties (tangible assets) into a few discreet geological prospects (“cash generating
units” or “CGU’s”).
45
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Share-based payments
The Group records charges for share-based payments.
For option-based share-based payments, to determine the value of the options management estimate certain
factors used in the option pricing model, including volatility, vesting date, exercise date of options and the
number of options likely to vest. At each reporting date during the vesting period management estimate the
number of shares that will vest after considering the vesting criteria. If these estimates vary from actual
occurrence, this will impact on the value of the equity carried in the reserves.
1.14 New and amended International Financial Reporting Standards adopted by the Group
The Group has adopted the following standard, which is effective for the first time this year. The impact is shown
below
New/Revised
International Financial
Reporting Standards
IFRS - Leases
Effective Date: Annual
periods beginning on or
after:
1 January 2019
EU adopted
Impact on the Group
Yes
See below
The introduction of amendments to IFRS 16 (Leases) significantly change the way to account for leases. The
changes effectively remove the distinction between operating leases (where payments are expensed to the
statement of comprehensive income) and finance leases; where the lease to be recognised results a right of use
asset and lease liability in the balance sheet, with the statement of comprehensive income reflecting depreciation
of the right of use asset and the interest charge on the lease liability. All leases (subject to exemptions) are to be
accounted for effectively as finance leases.
The adoption of this new Standard has resulted in the Group recognising a right-of-use asset and related lease
liability in connection with the former operating lease.
The new Standard has been applied using the modified retrospective approach, with right of use asset and
corresponding liability recognised as an adjustment in the current period. At this date, the Group has also elected
to measure the right-of-use assets at an amount equal to the lease liability adjusted for any prepaid or accrued
lease payments that existed at the date of transition. Prior periods have not been restated.
The Group has elected not to include initial direct costs in the measurement of the right-of-use asset for operating
leases in existence at the date of initial application of IFRS 16, being 1 July 2019.
Instead of performing an impairment review on the right-of-use assets at the date of initial application, the Group
has relied on its historic assessment as to whether leases were onerous immediately before the date of initial
application of IFRS 16.
The impact of the implementation of this standard is set out below:
•
•
•
•
Recognition of lease liabilities and right of use assets, the initial impact of which is an increase in
property, plant and equipment and in total liabilities
A new finance expense due to the lease finance charge
Increased annual depreciation of property, plant and equipment for the duration of the leases
Elimination of the former operating lease rental expense
46
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
New standards and interpretations not applied
As of the date of these financial statements the IASB and IFRIC have issued a number of new standards,
amendments and interpretations. These new Standards, Amendments and Interpretations are effective for
accounting periods beginning on or after the dates shown below. Of these, only the following are expected to be
relevant to the Group:
Impact on initial application
Business Combination
Presentation of Financial Statements
Accounting Policies, Changes in Accounting
Estimates and Errors
Property, Plant & Equipment
Provisions,
Contingent Assets
Contingent
Liabilities
and
Effective date
1 January 2020
1 January 2020
1 January 2020
1 January 2022
1 January 2022
Standard
IFRS 3*
IAS 1*
IAS 8*
IAS 16*
IAS 37*
*
Amendments
The Group does not anticipate that the adoption of these standards will have a material effect on its financial
statements in the period of initial adoption.
1.15
Share based payments
On occasion, the Company has made share-based payments to certain Directors and advisers by way of issue of
ordinary shares and share options. In the case of share options, the fair value of these payments is calculated by
the Company using the Black-Scholes option pricing model. The expense is recognised on a straight-line basis
over the period from the date of award to the date of vesting, based on the Company’s best estimate of the number
of shares that will eventually vest.
During the year, no share-based payments were made.
2.
(Loss)/Profit per share
The total loss per ordinary share for the group of 3.4 US cents (2019: 10.54 US cents - Profit) is calculated by
dividing the loss for the year from continuing operations by the weighted average number of ordinary shares in
issue of 500,386,832 (2019: 336,744,317).
The diluted profit per share has been kept the same as the basic profit per share because the 19,607,843 options in
issue were out of the money as at 30 June 2020 and as a result have not been included in the weighted average
number of shares number.
The diluted weighted average number of shares in issue is 500,386,832 (2019: 336,744,317).
47
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
3.
Acquisitions and Disposals
On 28 April 2020 Vision Resources LLC filed Chapter 7 Bankruptcy in the United States Bankruptcy Court for
the Southern District of Texas Houston Division. At this time control of the company was transferred to a court
appointed bankruptcy trustee. At 30 June 2019 the group recognized an impairment of its $0.7 million investment
in Vision Resources LLC and a $0.3m bad debt relating to Oil & Gas receipts not received. For the years ended
30 June 2020 and 2019 Vision Resources LLC contributed $Nil to the group income/loss.
The de-consolidation of Vision Resources LLC has resulted in:
• $0.1m Gain on disposal of a subsidiary undertaking, which has been recognised in the Consolidated
Statement of Comprehensive Income for the year ending 30 June 2020.
• The elimination of a non-controlling interest in the Consolidated Statement of Financial Position for the
year ending 30 June 2020.
Vision Resources LLC – Acquisition
• During the previous year ended 2019, the Group acquired a 66.6% interest in Vision Resources LLC
(“Vision”). As consideration, Pantheon issued 3.5m (US$0.7m) new fully paid ordinary shares as full and
final payment. The acquisition, which was completed on 14 January 2019, followed the death of the
Principal of the Vision companies in 2018.
• The provisional fair values of the total net identifiable assets and liabilities of Vision was
($164,215). The identifiable net assets at fair value attributable Pantheon Group was ($109,417) after
taking into account the minority interest of $54,708. The total consideration of $686,819 resulted in
Goodwill arising on acquisition of $796,236. Net cash acquired with the subsidiary was $1,920.
• The consideration for Vision in the prior year was 3.5m new fully paid ordinary shares (US$0.7m).
• From the acquisition date, 14 January 2019, to 30 June 2019, Vision Resources LLC contributed US$ Nil
to the Group loss. This is because Vision Resources LLC acts as a General Partner and does not engage in
day to day operations. During the period, Pantheon incurred expenditures of $1.7m through Vision,
relating to the East Texas assets. Following the death of the principal of Vision in 2018, significant
uncertainty and disruption occurred, and Vision’s capacity to continue to participate in the project was
assessed as being unlikely. It is expected that the costs will drop significantly going forward, now that
Pantheon has, post year end, decided to exit its involvement in East Texas.
• One third of Vision Resources LLC (33.3%) is not owned by the Pantheon Group. For accounting
purposes, this portion is termed a non-controlling interest (“NCI”). A NCI of ($54,708) is shown in the
consolidated statement of financial position which is made up of a NCI of ($54,708) on the total fair
value of net assets on the acquisition, and a current year NCI of Nil as shown in the consolidated
statement of comprehensive income.
• The goodwill on acquisition of US$796,236 arose principally because Vision Resources LLC had an
excess of liabilities over assets of US$164,125 on 14 January 2019 on a fair value basis. Pantheon paid
US$0.7m in new shares to acquire the 66% interest in Vision Resources LLC. None of the goodwill
recognised is expected to be deductible for income tax purposes.
Great Bear Petroleum Ventures I LLC & Great Bear Petroleum Ventures II LLC
In January, 2019, the Group acquired 100% of the share capital of Great Bear Petroleum Ventures I LLC and
Great Bear Petroleum Ventures II LLC companies (together “Great Bear” or “the Great Bear companies”). The
principal assets of Great Bear are leases with the rights to explore for hydrocarbons in the State of Alaska. At the
date of acquisition these leases were estimated to offer potential for over 2 billion barrels of oil in place across the
existing project inventory plus the additional exploratory potential identified in these leases. Additionally, Great
Bear had around 1,000 square miles of proprietary 3D seismic data which was acquired, as well as intellectual
property and technical data relating to the properties under lease. Prior to Pantheon’s acquisition, Great Bear and
48
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
its partners had invested over US$200m on acquiring and evaluating the hydrocarbon potential of its Alaskan
acreage.
In addition to the acquisition of the Great Bear companies and the projects identified in the Alaskan portfolio,
Pantheon acquired a highly talented technical and commercial team which the Directors believe were of great
value to the Group in both Alaska and Texas.
The provisional fair values of the identifiable assets and liabilities of Great Bear are:
Exploration and evaluation assets (Note 15)
Total identifiable net assets at fair value
Bargain purchase
Total consideration
The cash outflow on acquisition is as follows:
Cash paid
Net cash acquired with the subsidiary
Net consolidated cash outflow
Provisional
fair value
US$ million
148.5
148.5
148.5
100.8
47.8
6.1
-
6.1
Total consideration for the Great Bear Companies totalled US$47.8m as follows: Cash consideration of US$6.1m,
103.3m new fully paid ordinary shares (US$20.3m) valued at 15.25 pence per share, 102.5m new fully paid non-
voting B-class shares (US$20.1m) valued at 15.25 pence per share, and 9.6m new warrants (US$1.3m). The
warrants have an exercise price of £0.30 per warrant, expire in September 2024 and mirror the terms of the
Company’s existing share options except they are only convertible into non-voting convertible shares, convertible
on a 1:1 basis into ordinary fully paid shares.
Pursuant to IFRS3, the Directors undertook a fair value assessment of the assets acquired in the Great Bear
acquisition. No liabilities were acquired in the acquisition. For accounting purposes, the Directors adopted a
conservative methodology in making a fair value assessment of the assets acquired. Whilst this approach is
prudent from an accounting perspective, in reality these are accounting judgements and the real commercial value
of those assets acquired may differ significantly from these accounting judgements over the fullness of time. In
determining the appropriate fair value, consideration was given to a number of risks associated with the various
projects, which have then been ‘discounted’ or ‘risked’ in three primary categories:
1)
2)
3)
Geological Risk – the chance of finding oil or successfully appraising the existing discoveries.
Commercial Risk – involves the risk factors associated with commercialising the discovered oil. Not all
oil discoveries are commercially viable. These risk factors relate to the technical factors affecting the
extraction of the oil and also the logistical factors relating to the geographical location and fiscal regime
of the region.
Funding Risk – relates to the ability of Pantheon to attract partners and raise sufficient capital to
undertake the evaluation and development of the oil. These factors include oil prices and the state of
equity and debt markets.
In making a fair value assessment of the various projects in the portfolio, the Directors adopted a rigorous high-
grading exercise, only applying a fair value to the projects reasonably expected (at that time) to be funded and
drilled within the lease term. This is because at the time of acquisition, certain leases had lease terms remaining of
less than 18 months and there was no certainty that the Group will have activity on those leases or renew those
leases upon expiry. A key consideration in this process was the fact that the Group was undertaking a farmout to
assist funding operations. Given the uncertainty in predicting the financial capacity and likely drilling programme
desired by a future farm-in partner, the Directors undertook the fair value assessment on the basis that any
funding would be applied to either the Greater Alkaid or Talitha projects only at this early stage and no value
applied to the remaining exploration acreage. At the time Pantheon believed it prudent to prioritise Greater
49
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Alkaid and Talitha, having lower risk potential for earlier cashflows due the close proximity to existing
infrastructure. The Group adopted a conservative approach in making these accounting judgements, and at
Greater Alkaid applied a 70% Commercial Risk and a further 50% funding risk, reflecting the fact that the
farmout process was not at the time completed and that the introduction of a farm-in would involve the Company
reducing its working interest. The discovered oil at Greater Alkaid was then evaluated through a conceptual
development plan resulting in a Net Present Value (NPV) per barrel of oil of $8, lower than the $8.50 per barrel
of oil NPV estimated by the independent experts at LKA, reflecting management conservatism in accounting
judgements. At Talitha, a 50% Geological Risk was applied reflecting the fact that despite ARCO having
encountered oil at this location in 1988, the well was not production tested at the time. This is a conservative, yet
prudent approach, given the Pipeline State-1 well was drilled and logged, on our acreage. A 75% Commercial
Risk was then applied due the uncertainty of the reservoir parameters and hence production performance of the
oilfield, and a further 70% discount applied for Funding risk which incorporates the numerous variables
associated with financing this oil accumulation. The modelled Funding Risk was higher than at Alkaid, reflecting
the projects’ greater level of uncertainty on the technical parameters and geographic location in relation to its
distance from the road and pipeline. An NPV per barrel of oil of $5 - $6 was applied for the 2 key horizons,
reflecting certain geological factors and its location as described above which would result in higher development
costs.
After application of the aforementioned assumptions and risk parameters, the fair value assessment of the bargain
purchase of Great Bear Petroleum Ventures I, LLC and Great Bear Petroleum Ventures II, LLC (the “Ventures
Entities”) for US$100.8m arose principally because of the following factors:
1.
2.
3.
4.
5.
Great Bear Petroleum Operating, LLC (“GBPO”) was a financially distressed seller of Great Bear
Ventures I and II, having borrowed against encashable production tax credits issued by the State of
Alaska. The State of Alaska did not appropriate sufficient funds for the encashment of tax credits,
resulting in GBPO going into payment default under its borrowings.
Key leases of the Ventures Entities in Greater Alkaid were set to expire if testing operations did not occur
within the Winter/Spring drilling season of 2018/2019. The time pressure for the Ventures Entities to
secure funding for these operations was another factor in Pantheon’s bargaining position.
Pantheon’s existing team had significant Alaskan expertise, and was able to quickly and efficiently
evaluate the attractiveness of the prospective investment.
The existing owners of GBPO wanted to maintain exposure to the Ventures Entities’ assets, hence a
primarily equity transaction was undertaken, which resulted in Pantheon completing the transaction,
raising funding and preserving the Greater Alkaid leases through the, ultimately successful, 2019 testing
campaign. Additionally, all Great Bear shareholders have maintained their exposure to the Alaskan assets
through Pantheon.
In light of the above, Pantheon was able to negotiate an attractive acquisition price for the Ventures
Entities.
4.
Segmental information
The Group’s activities involve production of and exploration for oil and gas. There are three reportable operating
segments: USA (Texas), USA (Alaska) and Head Office. Non-current assets, income and operating liabilities are
attributable to the USA, whilst most of the corporate administration is conducted through Head Office.
Each reportable segment adopts the same accounting policies.
In compliance with IFRS 8 ‘Operating Segments’, the following tables reconcile the operational loss and the
assets and liabilities of each reportable segment with the consolidated figures presented in these Financial
Statements, together with comparative figures for the year ended 30 June 2019.
Oil and Gas production commenced in East Texas in late 2017 and ceased in early 2020 and is unlikely to continue
given the Group’s decision to exit the East Texas portfolio.
The Group’s net total sales production for the financial year ended 30 June 2020 amounted to 57,420 (2019:
191,024) mcf of natural gas and 158 (2019: 2,317) bbl. of oil. Average realisations for the year for natural gas and
oil were US$1.81 (2019: $2.58) per mcf and US$59.93 (2019: $62.54) per barrel of oil respectively.
50
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Revenues for the year ended 30 June 2020 were $85,312 (2019: $724,589).
Year ended 30 June 2020
Geographical segment (Group)
Revenue
Production royalties
Depletion of developed oil & gas assets
Cost of sales
Administration expenses
General & Administrative expenses -
Vision
Impairment of intangible assets – E&E
Impairment developed oil & gas assets
Impairment PP&E
Bad debt expense
Interest receivable
Gain on disposal of subsidiary
undertaking
Taxation
Loss by reportable segment
Head Office
$
-
-
-
-
(1,310,268)
-
-
-
-
23,759
Texas
$
85,312
(24,580)
(27,800)
(6,273)
(976,970)
(814,762)
(7,678,800)
(6,933,644)
(1,907,966)
(318,786)
2,121
Alaska Consolidated
$
85,312
(24,580)
(27,800)
(6,273)
(4,088,948)
$
-
-
-
-
(1,801,710)
-
(130,112)
-
-
-
-
(814,762)
(7,808,912)
(6,933,644)
(1,907,966)
(318,786)
25,880
-
-
(1,286,509)
109,417
-
(18,492,731)
-
4,732,467
2,800,645
109,417
4,732,467
(16,978,595)
Exploration & evaluation assets
Property, plant & equipment
Trade and other receivables
Cash and cash equivalents
Intercompany balances
Total assets by reportable segment
Total liabilities by reportable segment
Net assets by reportable segment
-
73,035
68,807
1,745,834
139,661,971
141,549,647
(377,024)
141,172,623
-
585,863
5,360
3,026,492
(130,145,522)
(126,527,805)
(836,570)
(127,364,375)
156,097,608
-
-
30,639
(9,516,449)
146,611,798
(5,877,883)
140,733,915
156,097,608
658,898
74,167
4,802,965
-
161,633,639
(7,091,476)
154,542,163
51
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Year ended 30 June 2019
Geographical segment (Group)
Revenue
Production royalties
Depletion of developed oil & gas assets
Cost of sales
Administration expenses
General & Administrative expenses -
Vision
Impairment of intangible assets -
Goodwill
Impairment of intangible assets – E&E
Impairment developed oil & gas assets
Impairment PP&E
Plug & abandonment costs
Depreciation of production & pipeline
facilities
Interest receivable
Un-realised gains
Less: deferred tax thereon
Taxation
Loss by reportable segment
Exploration & evaluation assets
Developed oil & gas assets
Property, plant & equipment
Trade and other receivables
Cash and cash equivalents
Intercompany balances
Total assets by reportable segment
Total liabilities by reportable segment
Net assets by reportable segment
5.
Operating loss
Head Office
$
-
-
-
-
(1,489,204)
-
-
-
-
-
-
25,671
-
-
-
(1,463,533)
-
-
635
57,167
1,312,164
134,985,268
136,355,234
(348,642)
136,006,592
Texas
$
724,589
(205,458)
(148,485)
(737,208)
(1,400,323)
(1,744,730)
(796,236)
(34,138,156)
(13,092,684)
(1,397,950)
380
(275,665)
110
-
-
-
(53,211,816)
Alaska Consolidated
$
724,589
(205,458)
(148,485)
(737,208)
(3,438,619)
(1,744,730)
$
-
-
-
-
(549,092)
-
-
-
-
-
-
-
-
100,757,286
(28,783,396)
18,757,633
90,182,431
(796,236)
(34,138,156)
(13,092,684)
(1,397,950)
380
(275,665)
25,781
100,757,286
(28,783,396)
18,757,633
35,507,083
7,303,800
6,961,445
2,493,829
358,813
541,445
(128,981,374)
(111,322,042)
(1,348,989)
(112,671,031)
153,583,460
-
-
1,427,669
377
(6,003,894)
149,007,612
(11,074,342)
137,933,270
160,887,260
6,961,445
2,494,464
1,843,649
1,853,986
-
174,040,804
(12,771,973)
161,268,831
Operating loss is stated after charging:
Depreciation – production facilities & equipment
Depreciation – office equipment
Depreciation Right of use assets
Auditor’s remuneration
- group and parent company audit services
Auditor’s remuneration for non-audit services
- taxation services and compliance services
2020
$
-
420
19,558
50,000
10,500
2019
$
275,665
431
-
85,000
12,000
52
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
6.
Employment costs
The employee costs of the Group, including Directors’ remuneration, are as follows:
Wages and salaries
Social security costs
Statutory pension costs
2020
$
1,237,242
70,541
16,172
1,323,955
2019
$
1,187,223
68,082
22,693
1,277,998
The summary of the directors’ remuneration is shown in the directors’ report on Page 15.
Number of employees (including Executive Directors) at the end of
the year
Management and administration
7.
Interest receivable
Bank interest received
8.
Taxation
Current tax
US federal corporate tax
US state and local tax
UK corporate tax
2020
2019
number
number
9
5
2020
$
2019
$
25,880
25,781
2020
$
-
-
-
2019
$
-
-
-
Factors affecting the tax charge for the period
Income (loss) on ordinary activities before taxation
Income (loss) on ordinary activities before taxation multiplied by the
standard US corporate tax rate of 21% (2019: US corporate tax rate of
21%)
-
(21,711,062)
-
16,749,449
(4,559,323)
3,517,384
Effects of:
State of Alaska tax benefits associated with temporary book-to-tax
differences
US federal tax benefit associated with temporary book-to-tax
differences
US federal tax benefit associated with reassessed future utilization of
loss carryforward
Total tax charge
Factors that may affect future tax charges
(173,144)
(51,615)
-
-
(14,267,460)
(7,955,942)
(4,732,467)
(18,757,633)
The Group’s deferred tax assets and liabilities as at 30 June 2020 have been measured at 21% for items subject to
US federal income tax only, items subject to state of Alaska and US federal income tax are reflected at an Alaska
rate of 9.4% and a US federal rate, net of state of Alaska tax deduction, of 28.426%.
53
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
At the year-end date, the Group has unused losses carried forward of $59.8m (2019: $47.6m) available for offset
against suitable future profits. Unused US tax losses incurred prior to January 1, 2018 expire in general within 20
years of the year in which they are sustained. Losses sustained after December 31, 2017 do not expire.
At June 30, 2020, given the deferred tax liabilities recognized in conjunction with the Great Bear Acquisition, the
directors believe it is appropriate to recognize the previously unrecognized deferred tax asset associated with
losses carried forward. This recognition resulted in a deferred tax benefit of $4,732,677 reflected in the results for
year ended June 30, 2020
9.
Subsidiary entities
The Company currently has the following wholly owned subsidiaries:
Name
Country of
Incorporation
Hadrian Oil & Gas LLC
Agrippa LLC
Pantheon Oil & Gas LP
Great Bear Petroleum Ventures I,
LLC
Great Bear Petroleum Ventures II,
LLC
Great Bear Pantheon, LLC
Pantheon East Texas, LLC
Pantheon Operating Company,
LLC
United States
United States
United States
United States
United States
United States
United States
United States
Percentage
ownership
100%
100%
100%
100%
Activity
Holding Company
Holding Company
Oil & Gas exploration
Lease Holding Company
100%
Lease Holding Company
100%
100%
100%
Holding Company
Holding Company
Operating Company
Pantheon Oil & Gas LP is 99% owned by Agrippa LLC as its limited partner and 1% by Hadrian Oil & Gas LLC
as its general partner.
10.
Trade and other receivables
Amounts falling due within one year:
Prepayments & accrued income
Other receivables
Total
Amounts falling due after one year:
Group
2020
$
29,906
44,261
74,167
Group
2020
$
Group
2019
$
Company
2020
$
Company
2019
$
332,000
1,511,649
1,843,649
27,207
41,600
68,807
13,214
43,953
57,167
Group
2019
$
Company
2020
$
Company
2019
$
Loans to subsidiaries
-
-
139,661,971
134,985,268
An annual impairment review of the amount due from subsidiary undertakings (loans to subsidiaries) is
performed by comparing the expected recoverable amount of the subsidiary’s underlying tangible and intangible
assets to the carrying value of the loan in the Company’s statement of financial position. This has been assessed
in line with IFRS 9 for credit losses however recoverability is supported by the underlying assets.
The Company fully transitioned from IAS 39 and adopted IFRS 9 from 1 July 2018 onwards. The adoption of
standard has not required any restatement of comparative information. On the basis of ongoing annual
assessments, the lifetime expected credit losses are recognised against loans and receivables when they are
identified and are recorded in the statement of comprehensive income.
54
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
11.
Cash and cash equivalents
Group
2020
$
Group Company
2020
$
2019
$
Company
2019
$
Cash at bank and in hand
4,802,965
1,853,986
1,745,834
1,312,164
12.
Trade and other payables
Group
2020
$
172,630
215,462
388,092
Group Company
2020
$
2019
$
Company
2019
$
398,312
1,012,035
1,410,347
87,451
215,347
302,799
174,690
173,952
348,642
Trade creditors
Accruals
Total
13.
Provisions
Plug and Abandonment Provision
The Group recognises a decommissioning liability where it has a present legal or constructive obligation as a
result of past events, and it is probable that an outflow of resources will be required to settle the obligation, and a
reliable estimate of the amount of obligation can be made. The obligation generally arises when the asset is
installed, or the ground/environment is disturbed at the field location. A breakdown of these costs is detailed at
Note 21.
Legal Costs
Legal costs have been provided for due to an ongoing dispute with a third-party vendor.
Plug and Abandonment
Legal costs
Total
14.
Impairments
Group
2020
$
Group Company
2020
$
2019
$
Company
2019
$
1,085,863
250,000
1,335,863
1,085,863
250,000
1,335,863
-
-
-
-
14.1
Impairment of non-current assets - exploration and evaluation assets
The combined impacts of COVID-19 and the severe falls to oil and gas prices had a destructive impact on the oil
and gas industry globally. As a result of this and as a result of the tremendous advancements in the geological
understanding and resource potential of Pantheon’s Alaskan portfolio since last year, Pantheon announced
subsequent to year end, its intention to exit its East Texas assets to concentrate solely on the Alaska North Slope
assets. Accordingly, the Group has impaired the total carrying value of the East Texas properties to nil.
During the year ended 30 June 2020 impairment charges of US$7.8m (2019: $34.1m) were recognised in respect
of exploration and evaluation assets, comprising US$7.7m (2019: $34.1m) in East Texas and US$0.1m (2019:
$Nil) in Alaska, primarily reflecting the impairment of the East Texas leasehold. Where impairment indications
were identified, impairment tests were performed. The indicator for impairment was the Group’s strategic
decision to exit East Texas and to solely focus the Group’s efforts on Alaska where the size and scale of the
Group’s opportunity is an order of magnitude greater. Additionally, the severity of the COVID induced fall in oil
and gas prices materially diminished the fair value assessment of the assets when compared to the previous year.
Where impairment indications have been found we have performed impairment tests. Impairment losses have
been measured, presented and disclosed in accordance with IAS 36. In assessing whether an impairment was
55
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
required, the carrying value of the asset is compared with its recoverable amount. The recoverable amount is the
higher of the assets fair value less costs to sell and value in use.
Impairment losses – exploration and evaluation assets
West AA Prospect – CGU (Texas)
West AA (prospect A leased acreage) - Polk County
VOBM#5 Well - Polk County
Austin Chalk (back costs) - Polk County
Kara Farms (previously leased acreage) - Polk County
West West AA Prospect – CGU (Texas)
West West AA (prospect D leased acreage) - Polk County
Prospect E – CGU (Texas)
Prospect E (leased acreage) - Polk County
Core Offset Prospect (aka Prospect B&C) – CGU
(Texas)
Core Offset (prospect B&C leased acreage) - Tyler County
LP2 Offset – CGU (Texas)
LP2 offset (leased acreage) - Tyler County
VOBM#4 Well - Tyler County
Alaska
Acreage
Total
2020
$
1,870,200
-
-
-
2019
$
10,312,298
3,445,153
5,751,637
139,757
908,250
1,980,518
-
57,204
4,845,750
8,343,593
54,600
-
955,517
3,152,480
130,112
-
7,808,912
34,138,157
14.2
Impairment of non-current assets – developed oil and gas assets
Impairment losses of US$6.9m (2019 $13.1m) were recognised in respect of the producing oil and gas properties
within East Texas. The Group has previously announced a strategic decision to exit East Texas and concentrate
solely on its Alaskan Assets. In light of the material fall in oil and gas prices in 2020, the company has fully
impaired the carrying value of the Oil and Gas producing properties.
Impairment losses – developed oil and gas assets
VOS#1 Well
VOBM#2H Well
VOBM#1 Well
VOBM#3 Well
Acreage
Total
2020
$
2019
$
6,933,644
-
-
-
-
-
7,426,917
2,533,041
3,076,644
56,082
6,933,644 13,092,684
14.3
Impairment of non-current assets – Property Plant & Equipment
Consistent with the Group’s strategic decision to focus solely on the Alaskan North Slope assets, the carrying
values of all East Texas property, plant and equipment have now been written down, resulting in impairment
charges of US$1.9m (2019: $1.4m). This charge relates to the impairment of the capitalised costs relating to
Pantheon’s share of the gas processing plant and the pipeline associated with the VOS#1 well. These assets have
been written down to their current recoverable amount less costs to sell.
56
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Impairment losses – Property Plant & Equipment
Polk County
Polk County Gas Plant
Pipeline
Total
2020
$
2019
$
22,680
1,885,286
1,907,966
1,397,950
-
1,397,950
14.4
Impairment of non-current assets - Goodwill
There were no impairment losses in respect of goodwill during the year (2019: $0.8m). For the year ended 30
June 2019 goodwill was recorded as a result of the acquisition of 66% of Vision Resources LLC and was fully
impaired in that year.
Impairment of Goodwill
Impairment goodwill – Vision
15.
Exploration and evaluation assets
Group
Cost
At 1 July
Additions
Acquisitions
Transfer to developed oil & gas assets
Transfer to production facilities & equipment
At 30 June
Impairment
As at 1 July
Charge for year
At 30 June
Net book value
At 30 June
2020
$
-
-
2020
$
2019
$
796,236
796,236
2019
$
201,830,954
3,019,261
-
-
-
50,303,959
10,579,750
148,508,125
(7,560,880)
-
204,850,215
201,830,954
40,943,694
7,808,912
48,752,606
6,805,537
34,138,157
40,943,694
156,097,609
160,887,260
The Group additions for the year comprise the direct costs associated with the preparation of drilling of oil and
gas wells, together with costs associated with leases and seismic acquisition and processing.
Details of the impairments for the year are disclosed in note 14.
16.
Disclosure required by IRFS 16 - Leases
Right of use assets
The Group used leasing arrangements relating to property, plant and equipment. As the Group has the right of use
of the asset for the duration of the lease arrangement, a “right of use” asset is recognised within property, plant
and equipment.
When a lease begins, a liability and right of use asset are recognised based on the present value of the lease
payments.
57
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Interest expense on lease liabilities
Total cash outflow for leases
Additions to right-of-use assets
Depreciation charge - right of use assets
Foreign exchange movement on right of use assets
Carrying amount at the end of the year:
Right of use assets
Lease liabilities
Current
Non-current
Disclosure required by IAS 17
Operating leases
Minimum lease payments under non-cancellable operating leases fall due as follows:
Land and buildings
Less than one year
Between on and five years
Group
2020
$
3,260
(21,394)
91,995
(19,558)
392
72,829
Group
2020
$
46,311
27,914
74,225
Group
2019
$
26,005
-
26,005
During 2019, $46,670 was recognised as an expense in the income statement in relation to operating leases.
58
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
17.
Property, plant and equipment and Developed Oil & Gas Properties
Group
Cost
At 30 June 2018
Additions
Transfer from exploration &
evaluation assets
Transfer from developed oil &
gas assets
At 30 June 2019
Transition to IFRS 16
At 30 June 2020
Depreciation
At 30 June 2018
Depreciation for the year
Exchange difference
At 30 June 2019
Depreciation for the year
Exchange difference
At 30 June 2020
Depletion
At 30 June 2018
Depletion for the year
At 30 June 2019
Depletion for the year
At 30 June 2020
Impairments
At 30 June 2018
Impairment for the year
At 30 June 2019
Impairment for the year
At 30 June 2020
Net book value
As at 30 June 2020
As at 30 June 2019
Developed
Oil & Gas
Properties
$
Production
Facilities
&
Equipment
$
Office
Equipment
$
Right of
Use Assets
Total
$
13,824,300
523,934
7,560,880
2,382,115
312,637
-
16,099
-
-
(1,618,208)
1,618,208
-
20,290,906
-
20,290,906
4,312,960
-
4,312,960
-
-
-
-
-
-
-
145,516
275,665
-
421,181
-
-
421,181
88,293
148,485
236,778
27,800
264,578
-
-
-
-
-
-
13,092,684
13,092,684
6,933,644
20,026,328
-
1,397,950
1,397,950
1,907,966
3,305,916
16,099
-
16,099
15,000
431
33
15,464
420
9
15,893
-
-
-
-
-
-
-
-
-
-
-
-
-
-
16,222,514
836,571
7,560,880
-
-
91,995
91,995
24,619,965
91,995
24,711,960
-
-
-
-
19,558
(392)
19,166
-
-
-
-
-
-
-
-
-
-
160,516
276,096
33
436,645
19,978
(383)
456,240
88,293
148,485
236,778
27,800
264,578
-
14,490,634
14,490,634
8,841,610
23,332,244
-
585,863
6,961,444
2,493,829
206
635
72,829
658,898
-
9,455,908
All ‘Developed oil & gas properties’ relate to East Texas. All prior East Texas wells have now been fully
impaired.
Company
The Property, Plant and Equipment for the Company comprises of Office Equipment $206 and Right of Use
assets $72,829 as shown above, resulting in a total of $73,035.
59
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
18.
Share Capital
Allotted, issued and fully paid:
502,758,713 (2019:454,530,466) ordinary shares of
£0.01 each
102,471,055 (2019: 102,471,055) non-voting
convertible shares of £0.01 each
Issued share capital:
As at 30 June 2020
502,758,713 ordinary shares of £0.01 each (2019:
454,530,466)
102,471,055 non-voting convertible shares of £0.01
each (2019: 102,471,055)
Total
2020
$
2019
$
7,250,204
6,647,498
1,318,517
1,318,517
Issued and
fully paid
capital
Number
502,758,713
7,250,144
102,471,055
605,229,768
1,318,576
8,568,720
The Company issued a total of 48,228,247 new fully paid ordinary shares during the year.
The ordinary shares rank pari passu in all respects including the right to receive dividends and other distributions
declared, made or paid.
As at 30 June 2020 there were 502,758,713 ordinary shares (2019: 454,530,466) and 102,471,055 non-voting
convertible shares (2019: 102,471,055) in issue.
60
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
19.
Net cash outflow from operating activities
(Loss) / profit for the year
Net interest received
Unrealised gains
Less: deferred tax thereon
Gain on disposal of subsidiary undertaking
Impairment of intangible assets - Goodwill
Impairment of intangible assets – E&E
Impairment developed oil & gas assets
Impairment of PP&E
Bad debt expense
Plug & abandonment costs
Legal costs provision
Vision General & Administrative costs (non-cash)
Depreciation of office equipment
Depreciation of right of use assets
Charge on Lease - right of use assets
Depletion of developed oil & gas assets
Depreciation of production & pipeline facilities
Decrease/(increase) in trade and other receivables
(Decrease)/increase in trade and other payables
Shares issued in lieu of fees
Effect of translation differences (fixed assets)
Effect of translation differences (right of use assets)
Effect of translation differences
Taxation
Net cash outflow from operating activities
Loss for the year
Net interest received
Depreciation
Depreciation of right of use assets
Interest charge on right of use assets
(Increase)/decrease in trade and other receivables
(Decrease)/increase in trade and other payables
Shares issued in lieu of fees
Effect of translation differences (fixed assets)
Effect of translation differences (right of use assets)
Effect of translation differences
Net cash outflow from operating activities
20.
Control
No one party controls the Company.
21.
Decommissioning expenditure
Plug & Abandonment
Group
2020
$
(16,978,595)
(25,881)
-
-
(109,417)
-
7,808,912
6,933,644
1,907,966
318,786
-
-
-
420
19,559
3,260
27,800
-
21,002
(854,972)
-
10
(29)
(47,800)
(4,732,467)
(5,707,802)
Company
2020
$
(1,286,509)
(23,759)
420
19,559
3,260
(11,639)
(45,844)
-
9
(29)
(3,792,479)
(5,137,011)
Group
2019
$
35,507,082
(25,781)
(100,757,286)
28,783,396
-
796,236
34,138,156
13,092,684
1,397,950
-
(380)
250,000
682,125
431
-
-
148,485
275,665
(1,823,240)
926,109
32,166
34
-
(179,284)
(18,757,633)
(5,513,085)
Company
2019
$
(1,463,533)
(25,671)
431
-
-
42,942
144,321
32,166
33
-
(3,625,534)
(4,894,845)
The Directors have considered the environmental issues and the need for any necessary provision for the cost of
rectifying any environmental damage, as might be required under local legislation. As at 30 June 2020 the Group
61
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
has fully provided for the future plug and abandonment charges in relation to all of its wells in both East Texas and
on the Alaskan North Slope.
Alaska
Greater Alkaid #1 test well
Texas - Polk County
VOBM#1 well
VOBM#2H well
VOBM#3 well
VOBM#4 well
VOBM#5 well
Texas – Tyler County
VOS#1 well
500,000
500,000
95,579
111,861
98,141
81,162
95,302
482,045
103,438
103,438
1,085,483
As at 30 June 2019 and 2020
22.
Exploration and evaluation commitments
There were no firm drilling commitments at 30 June, 2020.
23.
Financial instruments
The Group’s principal financial instruments comprise cash and cash equivalents, trade and other receivables and
trade and other payables. Financial assets and liabilities are initially measured at fair value plus transaction costs.
The main purpose of cash and cash equivalents financial instruments is to finance the Group’s operations. The
Group’s other financial assets and liabilities such as receivables and trade payables, arise directly from its
operations. It is, and has been throughout the entire period, the Group’s policy that no trading in financial
instruments shall be undertaken.
The main risk arising from the Group’s financial instruments is market risk. Other minor risks are summarised
below. The Board reviews and agrees policies for managing each of these risks.
Market risk
Market risk is the risk that changes in market prices, and market factors such as foreign exchange rates and
interest rates will affect the entity’s income or the value of its holdings of financial instruments.
The objective of market risk management is to manage and control market risk exposures within acceptable
parameters while optimising the return.
Interest rate risk
The Group’s exposure to the risks of changes in market interest rates relates primarily to the Group’s cash and
cash equivalents with a floating interest rate. These financial assets with variable rates expose the Group to cash
flow interest rate risk. All other financial assets and liabilities in the form of receivables and payables are non-
interest bearing. The Group does not engage in any hedging or derivative transactions to manage interest rate risk.
In regard to its interest rate risk, the Group continuously analyses its exposure. Within this analysis consideration
is given to potential renewals of existing positions, alternative investments and the mix of fixed and variable
interest rates. The Group has no policy as to maximum or minimum level of fixed or floating instruments.
62
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Interest rate risk is measured as the value of assets and liabilities at fixed rate compared to those at variable rate.
Weighted average
interest rate
2020
%
0.05
-
Fixed
interest rate
2020
$
Non – interest
bearing
2020
$
-
-
-
-
Financial assets:
Cash on deposit
Trade and other receivables
Net fair value
The net fair value of financial assets and financial liabilities approximates to their carrying amount as disclosed in
the statement of financial position and in the related notes.
Currency risk
The functional currency for the Group’s operating activities and exploration activities is the US dollar. The Group
incurs modest headquarters and advisory expenses in Pounds Sterling. The Group does not use derivative
products to hedge foreign exchange risk and has exposure to foreign exchange rates prevailing up to the dates
when funds are transferred into different currencies. The Group raises equity capital in Pounds Sterling and
converts the majority of this to US dollars shortly after receipt of funds to minimise currency risk. The Group
continues to keep the matter under review.
Financial risk management
The Directors recognise that this is an area in which they may need to develop specific policies should the Group
become exposed to wider financial risks as the business develops.
Liquidity risk
Prudent liquidity risk management includes maintaining sufficient cash balances to ensure the Group can meet
liabilities as they fall due.
In managing liquidity risk, the main objective of the Group is therefore to ensure that it has the ability to pay all
of its liabilities as they fall due. The Group monitors its levels of working capital to ensure that it can meet its
debt repayments as they fall due. The Group monitors its liquidity position carefully and would consider equity
fundraising, debt or farmouts when capital additional liquidity is required.
The table below shows the undiscounted cash flows on the Groups financial liabilities as at 30 June 2020 and
2019, on the basis of their earliest possible contractual maturity.
63
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Total
$
172,630
215,462
79,666
1,085,863
1,553,621
398,312
1,012,035
1,085,863
2,496,210
As at 30 June 2020
Trade creditors
Accruals
Lease liabilities
Provision for plug and
abandonment
As at 30 June 2019
Trade creditors
Accruals
Provision for plug and
abandonment
Credit risk management
Payable
on
demand
$
Within 1-3
months
$
Within 3-6
months
$
Within 6-12
months
$
Greater
than 1
year
$
-
-
29,350
-
-
25,158
-
25,158
1,085,863
1,115,213
-
-
-
-
-
-
1,085,863
1,085,863
-
-
-
-
-
-
-
-
-
172,630
215,462
12,579
-
400,671
398,312
1,012,035
-
1,410,347
-
-
12,579
-
12,579
-
-
-
-
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial
loss to the Group.
The Group has adopted a policy of only dealing with what it believes to be creditworthy counterparties and would
consider obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from
defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored, and the
aggregate value of transactions concluded is spread amongst approved counterparties.
Capital management
The Group’s capital management objectives are:
• To provide long-term returns to shareholders
• To ensure the Group’s ability to continue as a going concern
The Group defines and monitors capital to ensure that the Company meets its objectives above, focussing on
long-term share price growth and a short term requirement to ensure a going concern.
The Board of Directors monitors the available capital as well as the Group’s commitments and adjusts the level of
capital as is determined to be necessary by issuing new share if necessary. The Group is not subject to any
externally imposed capital requirements.
These policies have not changed in the year. The Directors believe that they have been able to meet their
objectives in managing the capital of the Group.
64
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
24.
Share-based payments
Movements in share options and
share warrants in issue
Exercise price
Number of
options and
warrants issued
as of 30 June 2019
Issued during
year
Expired during
year
Number of
options and warrants
issued
as of 30 June 2020
£0.30
£0.30
10,000,000
9,607,843
-
-
-
-
10,000,000
9,607,843
19,607,843
Total
The Group has previously issued share options to directors and employees. These are equity settled share-based
payments as defined in IFRS 2 Share-based payments. A recognised valuation methodology (using the Black &
Scholes valuation model) was employed to determine the fair value of options granted as set out in the standard.
The charge incurred relating to these options was recognised within operating costs. All share options have been
fully expensed as at 30 June 2020. The weighted average exercise price of share options outstanding and
exercisable at the end of the period was £0.30 (2019: £0.30).
19,607,843
-
-
In January, 2019, the Group previously issued 9,607,843 warrants as part of the consideration for the acquisition
of Great Bear Petroleum. The terms of these warrants mirror the terms of the current share options in issue,
however if exercised they convert to non-voting shares as opposed to ordinary shares. All 19,607,843 shares
options and warrants detailed in the table above are fully vested and expire in September 2024.
The Equity reserve account represents expired share options that were originally expensed through the profit and
loss account.
25.
Related party transactions
There were no related party transactions during the year other than the payment of remuneration to Directors and
key management personnel. Total key management personnel compensation, including directors and staff, was
$1,857,169.
26.
Contingent Liabilities
Vision Operating Company LLC (“VOC”) is in dispute with a third-party service provider, Kinder Morgan
Treating L.P. (“Kinder Morgan”) over the intended early termination of a gas processing agreement in East
Texas. VOC ceased making payments to the service provider in July 2019. The service provider subsequently
issued a demand to VOC and in January 2021 served Pantheon Resources plc with a petition, seeking a payment
of not less than $3.35m in respect of this VOC contract. Pantheon held ownership of less than 0.1% of VOC via a
66.6% interest in Vision Resources LLC. Both Vision Resources LLC and VOC filed for Chapter 7 Bankruptcy
in the United States Bankruptcy Court for the Southern District of Texas Houston Division at 28 April 2020
Pantheon was not a signatory to the gas processing agreement, is not named in the agreement, and explicitly
declined to provide any financial support in relation to the agreement. Pantheon has taken legal advice on the
matter and believes it has no liability to the service provider. Accordingly, Pantheon do not consider a provision
should be included with the final statements and will contest any claim made.
27.
Subsequent events
Capital Raising – November 2020
In November, 2020 Pantheon completed a capital raising of 73,756,314 new Ordinary Shares raising
approximately $30.2 million (before expenses) at an issue price of 31 pence per share.
65
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
The funds raised will allow the Company to drill and, if deemed appropriate, test up to four zones at the Talitha
#A well, intended to be spudded in January 2021. The Talitha #A well design includes provision for the drilling
of a horizontal section into the primary target, Shelf Margin Deltaic sequence, if deemed appropriate.
Change of Advisor – October 2020
Canaccord Genuity Limited was appointed as its sole broker and Nominated Adviser to the Company.
Receipt of Independent Experts Report and confirmation of Prospective Resource at Talitha
In September 2020 the Group received an Independent Experts Report and Resource Statement from the
International Petroleum Consultants Lee Keeling & Associates which confirmed a Prospective Resource of 302
million Barrels of oil for the updip section of the Shelf Margin Deltaic horizon at Talitha.
Issuance of Share Options to Directors and staff – July 2020
In July 2019 the Company announced the intention to issue up to 13.7m share options to Directors and to all staff
which were subsequently issued in July 2020. The options have an exercise price of £0.27, which represented a
premium of 93% to the closing share price of £0.14 on the day of issue (7th July 2020). 50% of the share options
granted vested 90 days from the issue date, and the remaining 50% vested upon the spudding of the Talitha #A on
the Company's Alaskan acreage. These were the first share options issued to staff since 2014. In relation to the
grant, the Company has implemented a share option grant which is comprised of two components; (i) an up-front
issue of out of the money share options (represented by this grant in July 2020), and an annual grant of share
options typically issued at or around the time of issuance of the Annual Report, in respect of the year just passed.
On 19 November 2020 at the time of the November fundraising, Pantheon announced its intention to issue share
options under the annual grant component of the plan representing 2.25% of share capital (voting and nonvoting)
at the issue price. It is anticipated that this will occur shortly after publication of the annual report.
Details of the July 2020 share option awards to Directors and PDMRs are presented in the following table:
Director
Number
of
options granted2
Exercise Price
per
Share
option
John Cheatham
1,500,000
Robert Rosenthal
1,500,000
Justin Hondris
1,500,000
27 pence
27 pence
27 pence
Options as a per cent of
issued Share
Capital following
Placing1
0.25%
the
0.25%
0.25%
1. Issued share capital includes all voting shares as at 30 June 2020 and 102.4m non-voting shares.
2. Terms: £0.27 exercise price, 10-year life and vested in 2 equal tranches; 50% subject to a time based
condition (90 days from grant) and 50% subject to a performance milestone (spudding of the Talitha #A
well, in Alaska).
Formal Approval of the Alkaid Unit
As part of the now granted Alkaid unit application (22,804 acres), Pantheon submitted a First Plan of Exploration
("POE") outlining its proposed activities in relation to the unit. These include a commitment to the reprocessing
of approximately 50 Square miles of 3D seismic as well as engagement of 3rd party specialists to produce an
engineering study on a conceptual 'hot-tap' into the Trans Alaska Pipeline System ("TAPS"). There are no firm
drilling commitments, however the POE proposes the drilling of two wells from gravel pads located adjacent to
the Dalton Highway to allow year round activity. Under the POE, drilling and long-term production testing on the
first of these wells, the Alkaid #2 well, is targeted for as early as Spring/Summer 2021, subject to funding.
Dependent upon the results of Alkaid #2, the POE anticipates the drilling and testing of the Alkaid#3 well to
commence in 2022.
66
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
Formal Approval of the Talitha Unit
The Company's application to form the Talitha Area Unit has been formally approved by the State of Alaska,
Department of Natural Resources ("DNR"). The Talitha Area Unit encompasses 44,463 acres of State Leases in
the central Alaska North Slope area, located adjacent to both the Trans Alaska Pipeline System ("TAPS") and
the Dalton Highway. The unit lies directly adjacent to the southern border of the recently-approved Alkaid Unit,
20 miles south of the Prudhoe Bay Unit, and 25 miles southeast of Kuparuk River Unit and has an effective date
of November 10th 2020.
Acquisition of New Acreage
In January 2021, Pantheon announced the successful acquisition of a 100% interest in approximately 66,000 acres
in the State of Alaska's North Slope Areawide Lease Sale. The new leases are strategically positioned in two areas
contiguous to our current acreage on our northwestern, western, and eastern boundaries. Pantheon's acreage now
totals approximately 160,000 contiguous acres.
Dispute Update – East Texas
Kinder Morgan Treating L.P. ("Kinder Morgan") has filed a petition against Pantheon, seeking payment of
c.$3.35m with respect to the early termination of a Gas Treating Agreement entered into between Kinder Morgan
and Vision Operating Company LLC ("VOC").
Refer note 26 for more detail.
Spudding of the Talitha #A well, North Slope of Alaska, 100% working interest
The Talitha #A appraisal well spudded ahead of schedule on 13 January, 2021, with drilling planned to a total
vertical depth of approximately 10,000 feet. The well will target the shallowest Shelf Margin Deltaic horizon as
the primary objective and will also drill through a number of secondary objectives including: (i) the 'Slope Fan
System', (ii) the 'Basin Floor Fan', and (iii) the 'Kuparuk' horizons.
Drilling and testing operations at Talitha #A must be completed prior to the onset of Spring when temperatures
warm up and the ice road begins to thaw. Historically, the drilling season has ended near the end of March. Given
the number of targeted formations, and subject to positive results, Pantheon intends to make full use of the
available drilling window, undertaking drilling and testing operations as long as weather permits. As of 1730
Alaskan time on 13 January the well was drilling ahead at a depth of 225 feet.
Following the acquisition in January 2021 of an additional 10.8% working interest discussed below, Pantheon
moves from 89.2% to 100% working interest in the Talitha unit.
Acquisition of 100% of Borealis Alaska LLC and its 10.8% working interest in the Talitha Unit
In January 2021, Pantheon acquired 100% of Borealis Alaska LLC. Borealis owned a 10.8% working interest in
the Talitha Unit. Upon completion of the transaction, which is subject to approval by the Alaska Department of
Natural Resources, Pantheon will own a 100% working interest in the Talitha Unit. Pantheon will issued
14,272,592 ordinary fully paid shares in consideration for the transaction, which are subject to a lock in
agreement and are not available for sale until 30 June 2021, in full and final consideration for the 10.8% working
interest.
GLOSSARY
bbl
bopd
mmbo
boepd
mcf
NCI
barrel of oil
barrels of oil per day
million barrels of oil
barrels of oil equivalent per day
thousand cubic feet
non-controlling interest
mcfd
Mmboe
NPV
NPV10
$
OIP
67
thousand cubic feet per day
million barrels of oil equivalent
net present value
net present value at 10%pa discount rate
United States dollar
Oil in place
PANTHEON RESOURCES PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
68